The Egyptian government is working on amending the payment method of a new tax on stock dividends and capital gains, the finance minister said on Thursday, dampening market expectations of any big changes to the unpopular levy.
President Abdel Fattah al-Sisi approved a law imposing a 10 percent tax on stock dividends and capital gains last July as part of efforts to overhaul an economy battered by years of political turmoil.
But Egyptian investors say the law is causing confusion and hampering investment, and filed a lawsuit against the government this week demanding changes to certain aspects of it.
"The main amendments we are working on are over the tax payment mechanism," Hani Kadry Dimian told reporters at a news conference, without elaborating.
Traders have said the market does not understand how the tax will be calculated or collected, adding to uncertainty heightened by an indefinite delay to parliamentary elections.
The stock market hit a four-month low in early trade on Tuesday, but later rebounded on hopes for a compromise on the tax.
Although the law was approved in July, the "executive regulations", which stipulate how it will be applied, were not published until this month and investors say there are many ambiguities.
Separately, Dimian said Egypt hopes to issue sukuk, or Islamic bonds, at the beginning of the 2015/2016 fiscal year.
"We hope to issue, at the very least, an ijara-structured sukuk at the beginning of the new fiscal year," he said.
The ijara sukuk structure is a sharia-compliant sale and lease-back contract.
Dimian said his ministry had completed amendments to a sukuk law and a draft had been sent to the Islamic Development Bank for the opinion of the Sharia board.
The sukuk law was first passed in 2013 under the rule of Islamist president Mohamed Mursi who was toppled by the army after mass protests against his rule in the same year.