Following the government’s decision Monday not to implement a capital gains tax, Prime Minister Ibrahim Mehleb and Minister of Investment Ashraf Salman visited the Egyptian Stock Market to open the trading session.
An EGX statement said Mehleb and Salman stressed, during their visit, the government’s commitment to Egypt’s financial market.
EGX head Mohamed Omran thanked the government for its “decisive and rapid” interference to solve the issue facing the stock exchange over the past few months, the statement said.
“The government’s response explicitly means that this government is fully informed with the economic conditions and has a clear and organised vision of the development process,” Omran said, noting that the decision sends a message that the government is committed to support investment climate.
Omran added that the decision shows the government understands the “developmental role” the stock market is playing. He added that over EGP 100bn has been pumped into increasing capital through the companies listed on the market during the last decade.
In March, Salman said the government is working to reduce the 5% tax on the capital gains system imposed last July. The tax on capital gains and monetary dividends earned on the stock market was estimated to deliver between EGP 5bn and EGP 6bn to the treasury.
The government is hoping to collect EGP 549bn in budget revenues in the fiscal year (FY) 2014/15, compared to EGP 569bn in revenues in the previous fiscal year. However, the expenditures’ estimate of the current fiscal year is EGP 789bn. The budget deficit is expected to register EGP 240bn, which is equivalent to 10% of GDP.
The expected amount of tax revenues to be collected during the FY 2014/2015 had increased to EGP 364bn compared to EGP 358bn last year, representing a 1.6% increase.