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Egypt to collect foreigners' capital gains tax on each transaction

Yousef Gamal El-Din | CNBC

Egypt will collect capital gains tax from foreigners with each transaction, the country's finance minister Hany Dimian said in a television interview late on Saturday.

The interim government agreed to impose a new 10 percent capital gains tax on profits made on the stock market last week as part of its first phase of tax reforms which it expects to bring in 10 billion Egyptian pounds ($1.42 billion).

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The 10 percent tax will be imposed on cash dividends and on net capital gains that Egyptians make at the end of the tax year. But Dimian said foreigners would be taxed with each transaction.

"For foreigners... I will (collect) transaction-by-transaction because they can carry out a transaction and leave," he said on private Egyptian television channel CBC.

"The expected amount to be collected from this tax will range between 3.5 billion pounds and 4.5 billion pounds."

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Egypt's stock index opened 5 percent lower on Sunday after the news of the new tax.

Egypt is eager to encourage investment but is also trying to find additional sources of revenue after more than three years of economic and political turmoil since a popular uprising toppled autocrat Hosni Mubarak in 2011, deterring foreign investors and tourists.

Profits from the stock market are currently tax-free, and Dimian said the new tax will not be retroactive.

Abdel Fattah al-Sisi, the former army chief who toppled the country's first freely-elected president Mohamed Mursi last year, won a presidential election with more than 90 percent of the vote last week, according to provisional results.