Egypt’s tax landscape is undergoing significant reform, with substantive amendments to the Income Tax Law and Stamp Tax Law designed to eliminate double taxation and invigorate the nation’s stock market. These changes, spearheaded by the Egyptian Tax Authority (ETA), aim to attract investment and foster a more robust financial ecosystem.
Rasha Abdel Aal, Head of the Egyptian Tax Authority, announced the comprehensive package of benefits and incentives for securities activities. This initiative, developed in close coordination with the Ministry of Finance and the Financial Regulatory Authority, aligns with the directives of Minister of Finance Ahmed Kouchouk to support compliant taxpayers and stimulate investment. The reforms represent the second phase of tax facilities aimed at economic support.
The amendments introduce key changes to Income Tax Law No. 91 of 2005 and Stamp Tax Law No. 111 of 1980. Notably, capital gains derived from the disposal of securities listed on the stock exchange will be exempt from income tax. Instead, only a proportional stamp tax, as stipulated by the Stamp Tax Law, will apply. This move is intended to reduce the tax burden on stock market transactions and encourage greater participation.
Furthermore, companies that choose to list their shares on the Egyptian Stock Exchange will be eligible for cash incentives and promotional benefits. To streamline tax accounting for investors, a simplified mechanism for calculating the acquisition cost of unlisted securities has been established. This aims to facilitate clearer tax computations for capital gains on these assets.
In a move to enhance transparency and fairness, the sale of unlisted securities has been specifically excluded from stamp tax, with income tax remaining the sole applicable levy. This measure is designed to definitively eliminate double taxation on such transactions. Additionally, the “market maker” activity has been exempted from stamp tax, recognising its crucial role in supporting the Egyptian stock market and boosting trading volumes. These legislative adjustments are poised to significantly impact corporate finance strategies, investment decisions, and compliance obligations for businesses and financial institutions operating within Egypt.
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