- IMF says Cairo needs to introduce new fiscal measures
- Egypt delayed a capital gains tax in May
- Government is under pressure to reform the economy
The Washington-based IMF says Egypt will have to introduce other tax or spending measures to meet its economic objectives following its decision to delay the introduction of a new capital gains tax.
the Egyptian authorities have an ambitious economic plan to meet the aspirations of the Egyptian people. Steadfast implementation of this plan including the medium-term fiscal objectives will be needed, said William Murray, the IMFs deputy spokesman – communications department at a press briefing in Washington on 28 May. The capital gains tax was one of the measures taken to meet these objectives. In its absence, other tax or spending measures will be needed to meet the same objective.
Egypt froze plans for the proposed 10 per cent tax on capital gains following criticism from investors on 18 May, Egypts 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 Egypts 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 countrys fiscal deficit.
The news caused Egypts 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 countrys fiscal deficit, which has widened in recent years.