(Adds stock market reaction, economist comments)
CAIRO Feb 23 Egypt's Finance Ministry is
recommending a tax on stock exchange transactions of 0.2 percent
on both sellers and buyers, a senior ministry official told
Reuters on Thursday.
The official said he expected the stamp duty to come into
effect before May and to generate revenue of 1 billion to 1.5
billion Egyptian pounds ($63 million to $94.5 million) in
"We will send the income tax law amendments in early March
to parliament, and they will include imposing a stamp tax on
bourse transactions of 4 pounds per 1,000, which will be 2
pounds per 1,000 on the seller and 2 pounds per 1,000 on the
buyer," the official said.
"We are targeting implementation of that tax before next
May," he added.
The EGX 30 main index fell by 1.34 percent after
the news, but economists said investors would take it well,
having expected, and priced in, a higher tax rate.
"The stamp tax of 0.2 pct is definitely below market
speculation of 0.4 to 0.5 percent, so this is more of a relief
for the market, which had been pricing in a much higher rate,
said Allen Sandeep, head of research at Naeem Brokerage in
"While this is an acceptable rate for an emerging market
like Egypt, deferment of the tax charge would still be the ideal
scenario, given the (current) emphasis on attracting foreign
capital," he added.
Egypt imposed a stamp duty on buyers and sellers in May
2013, collecting more than 350 million Egyptian pounds ($18.77
million) in revenue before the levy was replaced in July 2014 by
a 10 percent capital gains tax.
Egypt suspended the capital gains tax in May 2015 for two
years, under pressure from investors. They said it was
discouraging business just as Egypt was struggling to recover
from a plunge in confidence after a 2011 uprising and subsequent
The Higher Investment Council last year extended the
suspension of capital gains tax for three years, until 2020 as
part of efforts to draw investors back.
More than 270 companies are listed on the Egyptian stock
exchange and more than 500,000 investors are registered to trade
($1 = 15.8700 Egyptian pounds)
(Reporting by Ehab Farouk and Ahmed Aboulenein; Writing by Asma
Alsharif; Editing by Mark Trevelyan and Gareth Jones)