Egypt has frozen plans for the proposed 10 per cent tax on capital gains following criticism from investors.

On 18 May, Egypt’s Finance Ministry announced that it has decided to put the capital gains tax on hold for at least two years.The Cairo index gained 6.2 per cent on the day of the announcement.

The news was unexpected following claims by the ministry during Egypt’s Economic Development Conference (EEDC) in March that the tax laws would only be amended.

In May 2014 the government decided to introduce the new tax to help alleviate the country’s fiscal deficit.

The news caused Egypt’s exchange to drop 3.45 per cent on 29 May 2014.

The move was meant to be part of a system of tax reforms that is meant to broaden the base of taxpayers and introduce progressive tax through new proposals on real estate tax and value-added tax. It is also tackling subsidies on energy in order to curb the country’s fiscal deficit, which has widened in recent years.