Egypt cuts taxes to boost investment

Egypt’s Supreme Investment Council today approved a host of measures to boost investment that included an extended suspension of capital gains tax on shares and tax exemptions for producers in strategic sectors.

The move comes after the country’s economy was severely hit in the aftermath of the revolution in 2011 and the subsequent military coup which ousted the first freely elected President, Mohamed Morsi, in July 2013.

A number of industries, including tourism, were hit as a result of the coup and Egypt has been trying to attract investment to restore growth.

The council, set up by President Abdel Fattah Al-Sisi last month and is chaired by him, approved a total of 17 measures, Al-Sisi’s office said in a statement.

The government had imposed a 10 per cent tax on capital gains from shares in July 2014 as part of efforts to boost a severely strained budget, but froze it for two years in August 2015. Today’s statement said the freeze would be extended for three years, though it was not clear if this was from now or from the intended end in 2017. Government officials could not be reached for comment.

The measures also included wide-ranging tax exemptions for farmers and manufacturers who produce strategic crops or goods that Egypt imports or exports.

There were also new ways to settle tax disputes and to reduce bureaucratic barriers to investment, notably by introducing temporary manufacturing licenses while factories complete paperwork and forcing government agencies to grant licences or settle disputes faster.

“The Supreme Investment Council aims to review the state’s investment policies … remove all obstacles facing investors and … improve the investment climate,” the statement said.

The prime minister, the central bank governor and the finance, defence, interior, investment, trade and justice ministers all sit on the council, along with the chief of the General Intelligence Service.