Minister of Finance Mohamed Maait confirmed the implementation of the capital gains tax in January 2022 to CNBC Arabia, with the first tax payment to be due in April 2023. Maait noted that the market is currently in a better state than it was last year in light of the pandemic.
Who is affected🤷: A 10% tax will be applied on the net profits of stock portfolios at the end of each tax year, after deducting brokerage fees. Foreign investors, however, will not pay taxes on capital gains as the new rules will only apply to people and companies residing in Egypt. The tax authority said that investors with portfolios worth more than five million pounds may have to open a tax file to pay taxes. Investors with smaller portfolio sizes will not have to do so, as their taxes will be collected by Misr for Central Clearing (MCDR).
Why is this important🤔: Head of the Egyptian Securities Association Mohamed Maher pointed out that the timing of imposing the tax is not appropriate, because the Egyptian market has not recovered from the pandemic yet, and its impact still hangs over the Egyptian market. He stated that the economic policy at the time the capital gains tax was introduced in 2015 was a deflationary one, & interest rates were rising. Now, the economic policy is an expansionary policy, especially since the central bank is in more control of interest rates.