The International Monetary Fund (IMF) mission called on the Ministry of Finance to reconsider the decision to delay the application of the capital gains tax and to work to implement it again as soon as possible, according to an official source at the Ministry of Finance.
According to the source, who asked not to be named, the IMF mission has asked the Ministry of Finance to prepare for the implementation of the capital gains tax and study the experiences of the countries that apply the tax. “We began to prepare training for those responsible for the application of the capital gains tax, in addition to the agreement with the Egyptian Exchange (EGX) to prepare training courses to deal with the tax,” the source said.
“We are working on the processing of the application of capital gains, until the government takes a decision to re-apply,” the source said.
The IMF mission visited Egypt during the last week of October, when it met with the leaders of the CBE, the Ministry of Finance, and the ministers of the economic group.
The capital gains tax of 10% was imposed in 2015, but the failure to properly apply it had a negative effect on investments in the stock exchange, which forced the government to postpone it for a period of two years, ending on 17 May 2017.
In May, the parliament approved the extension of the capital gains tax moratorium for an additional three years ending in 2020.
In June, the Egyptian government applied the stamp tax on EGX transactions. Both buyers and sellers split the tax, where buyers bear 1.25 per 1,000, and the same for sellers during the first year of application. The ratio in the second year increases to 1.5 then to 1.75 per 1,000.
According to data from the Ministry of Finance, revenues from applying the tax is expected to reach EGP 1bn, depending on the volume of EGX transactions.