The Madbouly government might use the tax code as part of a bid to solve one of the EGX’s most long-standing issues — liquidity. A package of tax reforms currently being finalized would see the exchange introduce a tiered, performance-based tax system that rewards companies based on their actual trading volumes and freefloat size, a senior government official tells EnterpriseAM.

Why this matters: For years, the EGX has been home to ghost listings — companies that list the bare minimum required for regulatory or prestige reasons but keep 90-95% of their shares locked up. This results in dry stocks that institutional investors can’t touch. Officials hope that by tying tax breaks to the volume of shares actually hitting the market, companies would be encouraged to take decisions that keep their shares liquid.

Why does it matter? Liquid shares give current and future investors the confidence they need to comfortably build and later exit large positions.

If it is adopted, the new framework would link the size of a company’s tax break to the size of its offering and its free-float percentage. Large corporations entering the exchange would receive an initial three-year tax exemption. Companies would be put on a sliding scale, with the percentage of shares being offered and trading activity helping determine which incentive bracket they fall into.

Boards would be scored on how much they invest in their businesses, too: The hook is in the extension — a further three-year grace period would only be available if the company delivers tangible results in both capital expenditure and trading volume.

PLUS- The proposed overhaul isn’t limited to traditional stocks. To diversify the market’s DNA, the Financial Regulatory Authority and the EGX are working to reclassify gold and silver certificates, along with renewable energy and carbon credits, as formal financial instruments. This reclassification would allow these newer asset classes to fall under the same tax-incentive umbrella — a strategic move intended to draw a different breed of commodity- and ESG-focused traders (such as remain on our planet in this first year of Trump II) to the bourse.

AND- Officials are serious about the EGX itself becoming a publicly-traded company. They’re drafting proposed amendments to the Capital Markets Law that would turn the exchange from a public entity into a joint-stock company. Financial Regulatory Authority chief Mohamed Farid said at the end of last month that the EGX was gearing up for life as a public company, a path previously taken by regional peers including the Dubai Financial Market and Saudi’s Tadawul.

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