الهيئة العامة للرقابة المالية

Dr. Islam Azzam – FRA Chairman:

• Inter-agency synergy extends beyond tax incentives—it is about enhancing the overall investment ecosystem and boosting capital market appeal.
• Global benchmarks show tax incentives only succeed when paired with long-term investment policies.
• Canceling capital gains tax will lift the EGX, while exempting market makers from stamp duty will boost liquidity.
• The joint FRA-EGX-Tax Authority committee is designed to build trust with the business community and pool technical expertise.
• FRA will soon release the regulatory framework for short selling to diversify investment avenues and deepen the market.

Dr. Islam Azzam, FRA Chairman delivered the opening address during the market-opening bell ringing ceremony at the Egyptian Exchange (EGX) today, Monday. The event highlighted capital market tax reforms, specifically the abolition of the capital gains tax and the introduction of a proportional stamp duty. The event was attended by Minister of Finance Ahmed Kouchouk; Minister of Investment and Foreign Trade Dr. Mohamed Farid Saleh; EGX Executive Chairman Omar Radwan; Head of the Egyptian Tax Authority Rasha Abdel Aal; and EGX Vice Chairman Mohamed Sabry, who moderated a panel discussion on the regulatory tax amendments.

FRA Chairman emphasized that the new tax reforms marks a crucial step toward enhancing the appeal of the Egyptian capital market. He noted, however, that developing the investment climate extends beyond providing tax incentives; it requires genuine policy and operational synergy among all relevant authorities to drive market performance and strengthen its capacity to attract both domestic and foreign investments.

He added that recent international studies indicate tax cuts alone are no longer sufficient to attract major corporations and investment capital. Instead, it has become essential to adopt medium to long-term policies alongside a diverse range of incentives that encourage investment across multiple sectors and levels – a strategy the Egyptian government is executing through a comprehensive suite of reforms, recognizing that the Egyptian economy operates within a highly competitive regional and global landscape.

FRA Chairman further explained that the new tax reforms comes after years of close coordination between the Ministry of Finance and key stakeholders, including FRA. This joint effort aimed to address the practical challenges posed by the capital gains tax which faced collection hurdles and repeated postponements. The process culminated in a tax framework far better suited to long-term investment, designed to position the Egyptian market as an attractive destination for holding and parent companies.

Dr. Islam Azzam commended the key provisions of the new tax package, including a proportional stamp duty on total buy and sell transactions for EGX-listed securities. Under the new framework, a rate of 0.05% (0.5 per thousand) will apply to both buyers and sellers, while intraday trades will be subject to 0.025% (0.25 per thousand) for each party. Crucially, market makers are fully exempt from this duty to incentivize trading activity and inject liquidity, supported by ongoing coordination among FRA, EGX, and Misr for Central Clearing, Depository and Registry (MCDR) to implement safeguards against market speculation.

He also highlighted a major investment tax credit introduced for mega-corporations going public. Companies that IPO on the EGX based on an FRA-approved prospectus—with a fair value of at least EGP 50 billion—will receive a 15% corporate income tax discount for three years from the listing date, subject to specific regulatory conditions. This initiative aims to encourage large-scale enterprises to leverage capital markets for funding and ownership expansion, thereby driving up total market capitalization, trading volumes and the representation of high-impact equities in the benchmark EGX30 index.

FRA Chairman underscored that tax reforms must align with an integrated, cross-agency strategic vision. A primary example of this synergy is his recent decision to establish a joint coordinating committee comprising FRA, EGX and the Egyptian Tax Authority. The committee is designed to develop the capital market’s tax framework and rebuild trust between tax administrators and the business community.

Dr. Islam Azzam outlined that the joint coordinating committee will be tasked with several key responsibilities. These include studying the tax implications arising from the implementation of the Capital Market Law, formulating recommendations for appropriate tax treatments across various activities and transactions, and defining applicable tax frameworks specifically for investment funds. Additionally, the committee will focus on training personnel at both the Egyptian Tax Authority and EGX through technical knowledge-sharing. It will also issue joint guidelines covering tax accounting controls for listed and unlisted securities as well as investment fund operations, while establishing a clear classification system for investment funds to unify and standardize related tax procedures.

FRA Ch

airman noted that the decision aims to foster collaborative action to resolve all pending tax issues swiftly and arrive at actionable recommendations. This will enhance the overall appeal of non-banking financial activities alongside ongoing efforts to diversify investment channels and introduce new market mechanisms. Key initiatives designed to deepen market liquidity and competitiveness include the upcoming rollout of short selling the activation of market makers and the development of derivatives market launched in early March.

Dr. Islam Azzam concluded that Egypt’s capital market is entering a pivotal phase marked by unified regulatory, governmental and technical efforts. These measures coincide with legislative updates, strengthened governance, heightened market awareness and the deployment of new instruments to stimulate market activity. Together with supporting the government IPO program to broaden ownership, these initiatives align with the state’s economic development goals under “Egypt Vision 2030” to increase private sector participation in the economy.