Egyptian merging and acquisition markets are very attractive to Gulf and European investors

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Head of Taxes Committee at French Chamber of Commerce,  Karim Imam stated that merging and acquisition markets  in Egypt became very attractive -notably education, health,  and energy sectors- since Gulf and European investors are  currently competing to enter the Egyptian market.

Speaking to MEO, Imam said that one of the most important  issues that the Finance Ministry settled within the last period,  is overcoming the exchange rate discrepancy crisis that was  ‘an awful nightmare’ for the taxes community during 2013-  2015. The ministry also settled one of the administrative files  and restructured the Egyptian Taxes Authority to fill all job  vacancies, accordingly, raising the efficiency of operations.

How do you evaluate laws recently issued by Finance Ministry ?

Tax Dispute Resolution Law  reflects the trust between Tax  Authority and financiers.  One of the most important laws  that has been issued was the latest  version of Value Added Tax (VAT) law    in addition to issuing the executive list  of the VAT Law that was formulated  with commendatory professionalism.  The list considered the difference  between both legislative and executive  sides and was not far from reality  nor industrial and investment societies’  expectations  Another important issue that the  ministry settled was the exchange  rate discrepancy crisis that was ‘an  awful nightmare’ for the taxes society  during 2013, 2014, and 2015 after issuing  a decree to calculate undocumented  expenses.

How do you see the solution of  the exchange rate discrepancy crisis  that faced investors in 2016?

Calculating the exchange rate discrepancy  crisis in 2016 was solved  amid the Finance minister’s decree  to calculate the discrepancy in the  same year. The ministry also settled  one of the administrative files  and restructured the Egyptian Taxes  Authority, to fill all vacancies, accordingly,  raising the efficiency of operations.

What is your opinion about the  Tax Dispute Resolution Law?

This law, which was issued in September  2016, is a great idea but it  lacks promotional mechanisms notably  after the trust between Tax Authority  and financiers was lost. Thus,  it needs to create a new climate of  trust to urge financiers to resolve disputes.

Does the delay of issuing the  small-sized enterprises law have  any negative impacts?

The purpose of delaying the issuance  of small-sized enterprises law  is to convert from monetary economy  to non financial economy, eventually,  merging official and unofficial  economies. Thus, the law needs an  the unclear mechanisms of applying  it. It was better to clarify its basics or  design a more clear system for applying  the capital gains tax in addition  to a fair system for the investor.

How do you see the merging and acquisition markets in Egypt?

Merging and acquisition markets  in Egypt became very attractive as  the Egyptian assets became less expensive  amongst the liberalising exchange  rate of the Egyptian pound.  Also, the recent economic reforms inclusive system that includes efforts  of the Central Bank of Egypt (CBE)  as well as a number of ministries and  authorities.

How do you see the Finance  Ministry’s decree to replace the  capital gains tax on stock transactions  with the stamp tax?

We have to be aware that the capital  gains tax is not the reason that led  investors to leave stock transactions  since it does not represent real obstacles  for them; the Egyptian case  asserts this if we compared it with  its European counterpart. All investors  are foreigners, thus, they benefit  from the deducted tax in their country.  Additionally, Egypt has a number  of deals for the avoidance of double  taxation which would enable any foreign  investor to make use of them.

So, why were investors confused about it?

They were confused because of encouraged investors to enter the  Egyptian market.

What are the prominent sectors which investors seek to join?

Education, health, electricity, and  energy are the most attractive sectors  for direct investments. A number  of firms working on implementing  merging and acquisition deals received  many requests from European  and Gulf investors –notably the  Saudi ones- to enter the Egyptian  market.

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