The Egyptian Tax Authority (ETA) is considering imposing a hot money tax on the stock exchange to protect investment flow, despite reservations expressed by a number of experts.
Tax Authority President Ahmed Refaat told Al-Masry Al-Youm that the ETA is studying the issue, saying the proposal would be presented to Finance Minister Samir Radwan for discussion and approval after it is vetted in community discussions.
Refaat went on to say that the study includes controls to protect stock market investment flow as well as foreign investors entering or leaving the market. Refaat refused to disclose any details regarding the value of the proposed tax, when it might be levied on stock shares, or the regulations for securing transactions.
Nabil Abdul Raouf, an accounting lecturer at al-Shurouk Academy, said the ETA should review the history of tax policies on the Egyptian exchange, pointing to a similar proposal made by ETA Chairman Ashraf al-Araby in 2008, which the ministers of finance and investment rejected.
Egyptian Exchange Chairman Mohamed Abdel Salam, who is also chairman and managing director of Misr for Central Clearing, Depositary and Registry, said he did not expect any taxes to be imposed on stock investment returns.
Abdel Salam told Al-Masry Al-Youm that imposing taxes on stocks would pose a serious risk to market investments under current circumstances, especially since on average trade does not exceed LE500 million.
Financial expert Talal Tawfiq warned of the risks involved with imposing taxes on the market, especially since it is facing a liquidity crisis after losing billions due to the country's instability.
Officials halted trading on 30 January due to unrest that caused the market to fall 16 percent to LE70 billion since protests started on 25 January.
Tawfiq anticipated any protective tax would be rejected once again as it is regarded as an investment deterrent, although he acknowledged there was a global trend toward imposing hot money taxes.
Translated from the Arabic Edition
