Changed tax plans show Egypt's economic disarray

An abrupt implementation of a 10 percent capital gains tax on shareholders and investment funds that profited from the takeover of National Societe Generale Bank by Qatar National Bank created enough of an uproar to force authorities to reconsider and, just as abruptly, backtrack.

As a first reaction, shares of NSGB, the second biggest private bank, fell 10 percent in late March, pushing the benchmark index down to its lowest level since December. A day later, officials said investors can buy back their shares stocks and avoid being taxed on the sale.

This week, the market witnessed yet another about-face.

Mirroring the “here today, gone tomorrow” nature of most decisions taken by the government since late last year, it was reported Monday that taxes collected from shareholders just two weeks ago from QNB’s acquisition of NSGB would be refunded.

Abdallah Shahata, an aide to the finance minister, told Reuters that the move comes after Egypt decided to cancel a planned tax on stock market dividends and share gains in takeover bids.

It wouldn’t be the first time an announced tax was retracted by the same authorities who touted its importance just days before. The capital gains tax itself is part of a bundle of taxes presented in the government’s latest economic program, in a bid to spur recovery.