EGX Studies Impact Of Imposing Stamp Tax On Transactions; Chief Says
Dr. Mohamed Omran, Chairman of the Egyptian Exchange stated that the EGX management has immediately started a study following the government’s sudden decision to impose stamp tax on the bourse investors’ selling and buying transactions. The EGX management is studying the impact of such decision on the capital market performance for the coming period, Omran noted.
The Egyptian government has on Monday imposed a stamp tax on the EGX selling and buying transactions. As pursuant to the new tax, the investor shall pay one Egyptian pound for every transaction that exceeds one thousand pounds.
In a statement to the official news agency MENA, the bourse chairman added that EGX is conducting a comprehensive study that will be submitted after its completion to the country’s prime minister within this week. The study will be about the impact of the decision and will also tackle the expertise of other countries in imposing similar taxes on their bourses’ transactions.
Omran further said there are a very limited number of countries around the world which have imposed taxes on their bourses transactions. However, in these countries, the foreign transactions are excluded from such tax.
For the emerging and neighboring stock exchanges which are the main rivals for the EGX, there are no such taxes imposed on transactions, He indicated.
Meanwhile, money market sources noted that a number of investors associations in the country will be holding urgent meetings within the coming days in order to discuss the impact of the government decision to impose tax stamp on bourse transactions.
Mohsen Adel, money market expert, said that such a tax is totally unsuitable for the current period and will likely discourage investors who will shy away from trading.
Adel added that the EGX is currently suffering from investors’ reduced appetite as well as the lack of liquidity driven by the political turbulence.
Furthermore, Adel referred that the economic return from imposing such tax will be remarkably humble as it will not exceed EGP 200 million yearly. The government ought to create powerful incentives to invest in the EGX instead of adopting decisions that will drive the investors to abandon the market.
