Inside Egypt's shift from capital gains to stamp duty

Published: 2026-06-25T11:33:00.000Z

Egypt's stock market has spent more than a decade caught in an exhausting back and forth over how to tax it, and parliament has just tried to settle the question once more. Lawmakers approved amendments replacing the troubled capital gains tax framework on listed shares with a transaction based stamp duty.

Egypt's stock market has spent more than a decade caught in an exhausting back and forth over how to tax it, and parliament has just attempted to settle the question once more. Lawmakers have approved amendments that replace the long troubled capital gains tax framework on listed shares with a transaction based stamp duty. Under the new law, a stamp duty of 0.5 per thousand is imposed on the total value of both buy and sell transactions involving listed securities, applied equally to Egyptian and foreign investors, while same day trading gets a lower rate of 0.25 per thousand. Listed investment fund certificates are exempted to avoid taxing the same money twice. The logic behind the shift is about predictability rather than squeezing more revenue from investors. The capital gains tax that this replaces was repeatedly postponed over the years and never functioned smoothly, largely because the mechanism for calculating and collecting it created persistent uncertainty for investors who could never be quite sure what they would owe. Finance Minister Ahmed Kouchouk and other officials have argued that a flat levy on transactions is simpler, more transparent and easier to administer, and that the exemption for investment funds was specifically designed to preserve the appeal of collective investment vehicles. The minister framed the move as part of a broader effort to lure institutional money back into the Egyptian Exchange. The market's first reaction, however, was less than enthusiastic. On the day of the approval, the benchmark EGX30 fell 1.55 percent to close below the 52,000 point level for the first time in several weeks, with the broader indices following it down. Part of that slide reflects a genuine worry baked into any transaction tax, namely its effect on trading costs and turnover. Because the levy is charged on every trade regardless of whether the investor makes a profit or a loss, it falls hardest on active and high frequency strategies, raising the cost of moving in and out of positions. Long term investors who trade less often absorb it more easily, but the immediate concern was whether the new cost would further sap already weak liquidity in blue chip shares. The timing makes the stakes higher than usual. The Egyptian Exchange is under international scrutiny, with S&P Dow Jones Indices reviewing Egypt's classification within its emerging market universe, and the outcome hinges heavily on the market's ability to maintain adequate liquidity and accessibility for foreign investors. That puts the reaction to this tax change under a spotlight, since anything that dents turnover could weigh on that review. Notably, flow data showed foreign and Arab investors remained net buyers even as Egyptian investors sold, suggesting overseas appetite has not evaporated. The regional read is about competitiveness. Across the Middle East and North Africa, exchanges in the Gulf and beyond are competing for the same pool of regional and international capital, and tax certainty is one of the levers governments pull to attract it. Egypt's relatively low rate keeps it broadly competitive, but the real test will be whether a stable, transparent tax regime finally ends the uncertainty that has long hung over Cairo's market.