Egypt studies gradually raising tax on stock trades

The stamp duty on bonds would apply to transactions in the secondary market

Egypt is weighing a gradually increasing levy on stock trades and a tax on some bond transactions to help close one of the Middle East’s largest budget deficits.

The stamp duty on bonds would apply to transactions in the secondary market, Minister Amr Al Garhy said in a phone interview yesterday, without disclosing specifics.

The stamp tax on stocks may start at 1.25 pounds per 1,000 on both buyers and sellers of stocks, increasing to 1.5 pounds and 1.75 pounds in the second and third year, respectively, he said.

The proposal hasn’t been finalised and may be submitted to the cabinet for discussion as early as next week, he said on Wednesday. He earlier said the tax on stock trades would start at 1.75 pounds per 1,000.

News about the levy was blamed for the 5.8 per cent drop in the benchmark EGX30 stock index last month, reversing the rally triggered by the November 3 flotation of the pound.

Al Garhy said in January the tax will be small enough to ensure demand for the country’s equities remains strong.

Stocks rallied yesterday, climbing 1.9 per cent at 11:31am in Cairo.

Egypt is trying to attract investors to its financial markets to help revive an economy hit by years turmoil since the 2011 ouster of former President Hosni Mubarak.