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Egypt to lower top tax rate and threshold

Egypt will lower the top tax rate and threshold for companies and individuals in high income brackets and freeze a 10 per cent tax on capital gains within two weeks in order to attract investors and boost the economy, the finance minister has said.

“We await the issuing of amendments lowering the income tax ceiling to 22.5 percent as well as amendments to the capital gains tax within a few days; one or two weeks at the most,” Finance Minister Hany Dimian told Reuters in an interview.

The government had initially announced the decisions to lower the top tax rate on companies and individuals from 25 per cent to 22.5 per cent for 10 years in March, but it is yet to be signed into law by President Abdel Fattah Al-Sisi.

“The highest income bracket right now is E£250,000 ($32,000) annually and is taxed at 25 per cent. This will be reduced to 22.5 per cent and will be applied to those earning 200,000 pounds, not 250,000 like before,” Dimian said.

In May, the government said it would freeze a 10 per cent tax on capital gains, reversing a central component of its economic reform agenda that investors had criticised, but the freeze is yet to be signed into law.

It kept in place a 10 per cent tax on stock dividends. The Cairo bourse had previously been exempt from any taxes on capital gains or dividends.

The taxes, approved by Al-Sisi in July 2014 as part of efforts to overhaul an economy battered by years of political turmoil, were in April challenged in court.

Former army chief Al-Sisi, who ousted Egypt’s first freely elected president following mass protests against his rule, has promised a programme of reforms to win back foreign investors who fled the country after a 2011 uprising.

Egypt must balance attempts to narrow a budget deficit of around 10 per cent of GDP with efforts to boost business activity.  – Reuters

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