{"id":651963,"date":"2017-02-26T04:11:08","date_gmt":"2017-02-26T04:11:08","guid":{"rendered":"https:\/\/enterpriseam.com\/egypt\/2017\/02\/26\/finance-ministry-recommends-stamp-taxing-each-stock-market-buyer-and-seller-0-2-per-transaction\/"},"modified":"2017-02-26T04:11:08","modified_gmt":"2017-02-26T04:11:08","slug":"finance-ministry-recommends-stamp-taxing-each-stock-market-buyer-and-seller-0-2-per-transaction","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/egypt\/2017\/02\/26\/finance-ministry-recommends-stamp-taxing-each-stock-market-buyer-and-seller-0-2-per-transaction\/","title":{"rendered":"Finance Ministry recommends stamp taxing each stock market buyer and seller 0.2% per transaction"},"content":{"rendered":"

<\/a> The Finance Ministry will send draft legislation to the House of Representatives in early March that will create a 0.2% stamp tax on stock market transactions<\/strong>, a Finance Ministry source told Reuters<\/a>. The Both buyers and sellers will pay the tax on each transaction, making the effective rate on any given transaction 0.4%, split between both parties. The source says the Ministry is to begin applying the tax by May. He expects the stock market stamp tax to bring in EGP 1-1.5 bn in FY 2017-18, conditional on trading volumes. The source also hopes the House of Representatives will eventually raise the tax rate to 0.3%.<\/p>\n

The rate proposed is below the 0.4-0.5% speculated by the market<\/strong>, Allen Sandeep, head of research at Naeem Brokerage, told Reuters, \u201cso this is more of a relief for the market, which had been pricing in a much higher rate.\u201d Sandeep says the 0.2% is an acceptable rate for an \u201cemerging market like Egypt,\u201d but he would have preferred the tax be deferred altogether given the \u201cemphasis on attracting foreign capital.\u201d<\/p>\n

What will the stamp tax mean for the IPO pipeline in the first half of the year?<\/strong> That was the question Al Borsa<\/a> asked a number of investment banks popular with retail investors. Some, including Prime Holdings CEO Mohamed Maher, believe that while the tax will have an effect, the success and failure of IPOs at drawing investments will primarily depend on how attractive the pricing of the companies will be. Pioneer Holdings\u2019 head of brokerage Amer Abdel Kader takes the view that the stamp tax will have a negligible effect, as the EGP float has proven to be a major draw to investors that will be sustained after the tax is implemented. Others are not as optimistic, including Cairo Capital\u2019s Ahmed Abou Hussein. AT Brokerage\u2019s Mohamed Fattah Allah thinks that the tax would actually derail the IPOs of state-owned businesses.<\/p>\n

Al Borsa expects six \u201cmajor IPOs\u201d in the first half of the year:<\/p>\n