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Mon 6 Jun 2011 12:10 PM

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Billionaire Sawiris says Egypt capital gains tax is ‘disaster’

Move to add 10% tax will scare away investors from Egypt’s stock market, says Sawiris

Billionaire Sawiris says Egypt capital gains tax is ‘disaster’
Sawiris, the founder of Cairo- based mobile-phone operator Orascom Telecom Holding, said the tax would deter investors
Billionaire Sawiris says Egypt capital gains tax is ‘disaster’

Egypt’s proposed capital gains tax is a "disaster"
that will scare people away from the country’s stock market, billionaire Naguib
Sawiris said, adding pressure on the government to reconsider the plan.

"We are totally against it," Sawiris, the founder
of Cairo- based mobile-phone operator Orascom Telecom Holding SAE, told
Bloomberg Television in an interview Monday. "There are discussions now
that they withdraw that."

Finance Minister Samir Radwan on June 1 announced a 10
percent tax on dividend payments, mergers and acquisitions and asset
revaluations as part of a draft budget that aims to rein in a widening budget
deficit. Egyptian Exchange Chairman Mohamed Abdel Salam said the plan, which
won’t affect gains from trading, may harm the North African country’s stock
market.

A popular uprising that ousted President Hosni Mubarak in
February has sent Egypt’s benchmark EGX 30 stock index down 24 percent this
year, making it the world’s worst performing gauge. The index fell 2.7 percent
on June 2, the day after the tax plan was announced, and rebounded 1.6 percent
yesterday.

"We have explained our point of view to the Ministry of
Finance," Sawiris said. "The press has also been really supportive
and the head of the Cairo stock exchange was a very brave man and expressed his
concern. I think they will retreat."

Egypt’s budget deficit may widen to about 10 percent of
gross domestic product in the fiscal year that ends this month, compared with
8.1 percent in the previous 12 months, Radwan said.

The economy of the most populous Arab country may expand 2.6
percent this fiscal year compared with 5.1 percent in the year that ended June
2010, according to government forecasts.

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