The MPs, led by businessman and deputy chairman of the parliamentary industry committee Mohamed El-Sallab, said their legislative amendment followed an announcement by Finance Minister Mohamed Mait in early September that the new law on capital gains tax would be implemented in January 2022 as scheduled.
“The announcement has hurt business and trade in the Egyptian stock market, causing it to suffer losses amounting to EGP 27 billion in just two days,” the lawmakers said in a statement.
El-Sallab complained that stock market investors are currently suffering from numerous financial burdens resulting mainly from the coronavirus pandemic and its negative impact on the business climate in Egypt.
“So it is quite embarrassing for the government to come in these difficult times to impose a new tax on investors, regardless of the fact that more taxes lead to deterring businessmen from investing in the stock market.” El-Sallab said, calling for a dialogue between Minister Mait and investors to reach common ground ahead of the implementation of the new capital gains law next January.
MP Mahmoud El-Saiedi, a member of the Parliament’s Economic Affairs Act, also said MPs and businessmen demand that the implementation of the new capital gains law be postponed as it aims to save the Egyptian stock market from collapse.
“Before the introduction of this tax in January 2022, we expect a large number of Arab and foreign investors to exit the Egyptian stock exchange,” El-Saiedi said, adding that “in order to avoid this negative scenario, we propose either that a legislative amendment postponing the implementation of capital gains tax until January 2023 be submitted to parliament and adopted as soon as possible, or that the Ministry of Finance impose a exploitation of resources that will not be a big financial burden for equity investors. “
MP Mohamed Taha El-Khouli, leading member of the parliamentary majority party Mostaqbal Watan, said that “the Ministry of Finance has approved the postponement of the implementation of the capital gains law until the end of 2021 to on the grounds that this was an important step to mitigate the negative impact of the coronavirus pandemic on the Egyptian economy. ”
“But in early September, Finance Minister Mohamed Mait took everything by surprise by announcing that the government was determined that the capital gains law be implemented on January 1, 2022 as planned, a decision that caused a lot of panic among investors and caused them to exit the Egyptian stock exchange, “El-Khouli said, adding that” the negative impact of the coronavirus pandemic on the Egyptian economy is still present, it is important that the implementation of the capital gains tax be postponed until January 2023. “
The Capital Gains Law (199/2020) was first passed in July 2014, but the government was forced to postpone its implementation twice (in 2015 and 2017) for six years, preferring to impose a stamp duty on commercial transactions.
On September 3, the finance ministry said the law would be implemented in January 2022 as planned, imposing a 10% tax on business transactions.