Tuesday 28 September 2021
Books – Nashat Ali:
More than 20 members of the House of Representatives announced, with the countdown to the start of the new parliamentary session of the House of Representatives next October 2, their intention to submit a bill to amend some provisions of Law 199 of 2020 regarding capital gains tax on the stock exchange and to postpone the implementation until January 2023 instead of 2022.
This amendment is adopted by Representatives Muhammad al-Sallab, businessman and deputy of the Industry Committee, Dr. Muhammad Ali, undersecretary of the Economic Committee, Representative Mahmoud al-Saidi, member of the Economic Committee, Fayoum Deputy Muhammad Taha al-Khouli, member of the Tourism Committee, as well as Banha Deputy Darwish Marei, and Kafr El-Sheikh Deputy Sayed Shams El-Din. .
In adopting this legislative amendment, the deputies relied on what the stock exchange witnessed during the past few days. Because of the Minister of Finance, Dr. Mohamed Maait’s statement, insisting on applying the capital gains tax next January, which negatively affected the stock market, and losses in two days amounted to 27 billion pounds, according to Fayoum deputy Mohamed Taha Al-Khouli.
El-Sallab stressed that the Egyptian economy suffers from a lot of burdens. Because of the Corona crisis, and its effects are still continuing for years to come, it forces the government to refrain from imposing new burdens on investors as well as companies listed on the stock exchange; Because the multiplicity of types of taxes is one of the obstacles to investment.
Al-Sallab stated that the vibrations that the stock exchange was subjected to against the background of the statement of the Minister of Finance and the guiding guide confirm the importance of conducting a dialogue between the Ministry of Finance and the capital market before implementing and resorting to other, lesser alternatives, and the need for transparency and clarity in the application; In order to avoid problems, and for taxes to be a tool to encourage investment, and not hinder and hit investment.
Representative Mahmoud Al-Saidi stressed that postponing the application of this tax is an economic requirement to revive the stock exchange as an important tool for investment, and to avoid the exit of Arab and foreign investors from the stock market before December 31, and that there are other alternatives that must be studied; Including replacing the capital gains tax with a resource development fee tax; So we keep the stock market from crashing.
Representative Sayed Shams El-Din said that the state is moving to offer some large companies; Including the Administrative Capital Company in the stock exchange; In implementation of the directives of President Abdel Fattah El-Sisi; This is not the right time to apply this tax, and there are many alternatives, including the stamp tax, because it is more flexible than the capital gains tax.
Dr. Muhammad al-Salihi, Abu al-Naga al-Mahrazi, Yasser al-Hudaybi, Adel al-Lama’i, Atef al-Namki and Wafdi MP Hazem al-Jundi announced their intention to submit a request to summon the Minister of Finance at the beginning of the new parliamentary session of the Council on October 5 to discuss this issue before the Economic Committee and the repercussions that affected the stock market to reach a radical solution. Whether by canceling the capital gains tax and replacing a development fee or postponing it to restore stability to the stock exchange.
The text of Article 4 of Law 199 of 2020 regarding capital gains tax on the stock exchange is as follows:
The implementation of the tax on capital gains realized by residents of natural and legal persons from Egyptian securities is postponed until the end of 2021.
This deferment does not apply to the tax on capital gains realized by residents of natural and legal persons from the disposal of government bonds.
The amendment proposed by MP Muhammad Taha Al-Khouli in the draft law submitted by him to the parliament included the proposed text as follows:
The implementation of the tax on capital gains achieved by residents of natural and legal persons from securities listed on the Egyptian Stock Exchange is postponed until the end of 2022.
The second paragraph is as follows:
The explanatory note recommended the amendment to:
Law 199 for the year 2020 was issued, aiming to postpone the tax on securities in the stock exchange until the end of 2021, taking into account the difficult conditions that the Egyptian economy is going through; Especially the repercussions of the Corona crisis.
With the imminent implementation of the law and the issuance of a statement from the Minister of Finance, this had negative effects on the stock exchange and the losses continued, and a large number of companies and individuals decided to exit the stock exchange and go to other countries; Including Turkey.
The reasons that prompted the postponement of the application until the end of this year are still valid, and “Corona” continues and its economic repercussions continue; This requires postponing the implementation for a period of one year until the end of 2022, and conducting an expanded dialogue between the Ministry of Finance and the Securities Market, and the Plan and Economic Committees of the House of Representatives; To access alternatives to this expulsive tax to invest in the stock exchange.
The former deputies announced that for these reasons they are submitting this amendment.