5 key facts about Egypt's new capital gains tax

Get ready for significant changes in Egypt's financial landscape as the government announces the implementation of a new capital gains tax on shares and stakes listed in the Egyptian Stock Exchange (EGX) starting from March/April 2025. This pivotal decision, unveiled following high-level discussions led by Prime Minister Mostafa Madbouly, reflects Egypt's strategic efforts to fortify its stock market and streamline its tax framework. Here's a comprehensive guide to navigate through Egypt's forthcoming capital gains tax reforms.

1. Implementation Timeline: Starting from the tax season of March/April 2025, Egypt will enforce a capital gains tax on shares and stakes listed in the Egyptian Stock Exchange (EGX). This decision was announced by the cabinet, following a meeting led by Prime Minister Mostafa Madbouly, signaling a strategic move to enhance the country's stock market.

2. Nature of Capital Gains Tax: Capital gains tax is levied on the profits gained from the sale or disposal of certain assets, particularly securities traded in the stock exchange market. This tax varies in its rates and regulations across different countries.

3. Reasons for the Decision: The decision to implement the capital gains tax stems from several factors, including the absence of executive regulations for Law No. 30 of 2023 governing income tax, the lack of necessary procedures for tax calculation and collection, and the need for clarity on these processes through the Egyptian Clearing Company.

4. Transitional Measures: The Ministry of Finance is tasked with taking legal measures to waive the tax from the issuance date of Law No. 30 of 2023 until the end of December 2023. This transitional period aims to facilitate a smooth transition into the new tax regime.

5. Economic Impact and Targets: Egypt aims to bolster its economy through measures like the Initial Public Offering (IPO) program, intending to float stakes in state-owned assets on the EGX to boost private sector participation. With a target of EGP 2.6 trillion in general revenues for FY2024/2025, including a significant increase in tax revenues, Egypt is poised for substantial fiscal growth, potentially the highest in almost seven years.