EFG Hermes, one of the leading investment banks in the Middle East has lauded the recent tax reforms adopted by the Egyptian government ahead of the Egypt Economic Development Conference (EEDC), during which the country aims to present its economic plan and investment opportunities.
Commenting on the government’s decision to slash the maximum income tax rate on corporations and individuals from 30 percent to 22.5 percent for the next ten years, EFG Hermes said it sees the change as "providing the economy with a 0.5% fiscal stimulus, boosting trust and stimulating the capex cycle”.
It said, however, that the impact the decision would have on the fiscal deficit remains “minimal,” noting that the deficit “can easily be mitigated through higher growth rates and ongoing fiscal reforms.”
The EFG Hermes report said banks would be the biggest winners of the new measure, as their fiscal contribution is the largest.
“Banks are Egypt’s highest taxpayers, with most banks having effective tax rates of around 30% – they should therefore see the greatest immediate benefit from the proposed tax cut”.
