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Egypt imposes new tax on bank takeover

  • The Egyptian government announced on Tuesday that a takeover of its second biggest private bank would be subject to a new capital markets tax.

    The unexpected move sent investors scrambling and saw Cairo's stock exchange tumble to its lowest level since December, the same month the government announced it would introduce a 10 percent tax on major transactions on the stock market, including IPOs and takeovers.

    However, the government gave no indication of when the new taxes, designed to boost the nation’s coffers, would come into effect.

    The tax authority issued a statement at the start of the day’s trade saying shareholders and investment funds that make capital gains from Qatar National Bank's bid for National Societe Generale Bank (NSGB) would face a 10 percent levy.

    The 10 percent drop in NSGB’s shares helped drag Cairo’s benchmark index down 1.9 percent.

    According to analysts, introducing the tax without warning will discourage foreign investors at a time when Egypt sets out to restore investor sentiment following two years of political and economic turmoil.