Egypt has exempted capital gains from listed securities from income tax, replacing the levy with a proportional stamp duty as the government seeks to deepen the Egyptian Exchange and attract more institutional investment.The legislative amendments change the treatment of profits generated from the sale of securities listed on the Egyptian Exchange. Investors will no longer have to calculate and pay income tax on realised gains from those transactions. Instead, a stamp duty will be collected on the value of each purchase and sale.
The measure amends provisions of Income Tax Law No. 91 of 2005 and Stamp Duty Law No. 111 of 1980. It follows years of uncertainty over the taxation of exchange-traded securities, during which the implementation of capital gains tax was repeatedly suspended, revised or delayed.
Rasha Abdel Aal, head of the Egyptian Tax Authority, said the changes were designed to simplify compliance, eliminate overlapping taxes and improve the investment environment. The wider package also addresses dividend taxation, market-making activity and incentives for companies entering the stock exchange.
Under the amended framework, ordinary transactions involving listed securities are subject to a stamp duty of 0.05 per cent for buyers and the same rate for sellers. The charge is calculated on the gross transaction value rather than the profit generated by the trade.
Same-session transactions receive lower treatment. Investors buying and selling securities during the same trading session face a duty of 0.025 per cent on each side of the transaction. Licensed market makers are exempt from the duty for qualifying activities, reflecting their role in supplying liquidity and narrowing price differences between bids and offers.
The shift offers investors greater certainty because the tax cost can be established when an order is executed. Capital gains taxation required records of acquisition prices, brokerage expenses, disposals and realised profits, creating administrative difficulties for investors with large or frequently changing portfolios.
Stamp duty is simpler to collect through brokers and other executing entities. However, it is payable regardless of whether an investor makes money. A trader selling shares at a loss will still incur the charge because it applies to transaction value rather than investment returns.
High-frequency traders could therefore bear a larger cumulative cost than long-term investors. The lower rate for same-day trades is intended to limit that burden while preserving revenue and discouraging excessive speculative activity.
The former framework provided for a 10 per cent capital gains tax on profits made by resident individuals and companies from listed securities. Non-resident investors had different treatment, while repeated suspensions and transitional rules created uncertainty over liabilities and filing requirements.
The replacement of that system has been a central demand among brokers, portfolio managers and listed companies. Market participants argued that an easily collected transaction charge would be more predictable and less likely to discourage institutional investors from expanding their exposure to Egyptian equities.
Transactions involving unlisted securities will follow the opposite approach. Sales of unlisted securities have been removed from stamp duty and will be subject only to income tax. Authorities said the separation prevents the same transaction from falling under two forms of taxation.
The amendments also seek to end double taxation on dividend distributions. The package introduces a cash incentive, subject to eligibility requirements, for companies listing their shares on the exchange. The incentive is intended to encourage privately held businesses to raise capital publicly and broaden the market beyond its established issuers.
Egypt has been pursuing broader capital-market reforms alongside efforts to attract foreign currency, expand private-sector participation and reduce the state’s economic footprint. The government’s privatisation programme has identified public assets for partial or full sale, although the timing and structure of offerings have varied with market conditions.
The Egyptian Exchange’s benchmark EGX30 index stood above 53,000 points in late July, while total market capitalisation approached EGP4 trillion. Trading has been supported by domestic institutions and individuals, although currency movements continue to shape returns for overseas investors.
The tax changes could strengthen the exchange’s competitiveness as Egypt seeks new listings and a larger institutional investor base. Their practical impact will depend on implementing regulations, broker collection systems and consistent treatment across different categories of securities and investors.
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