Capital Gains Tax on the Disposal of Shares, Securities and Quotas Held in Companies
The Egyptian Income Tax Law promulgated by Law No. 91 of 2005 regulates the tax treatment of capital gains arising from the disposal of quotas held in companies and securities, by establishing the scope of taxation and the rules governing the calculation of capital gains and the tax that shall be payable on such gains. The importance of this treatment lies in the various forms that the disposal of securities may take and the different tax implications that may arise depending on the nature of the security, the status of the disposer, and the place where the disposal takes place.
Accordingly, determining the tax liability arising from such transactions requires reference to the relevant statutory provisions, taking into account the legislative amendments introduced to the Law and the special rules applicable to capital gains arising from the disposal of securities. This article therefore addresses the scope of capital gains tax applicable to the disposal of securities and quotas held in companies.
Scope of Capital Gains Tax
Pursuant to Article 46 bis (3) of the Egyptian Income Tax Law No. 91 of 2005, as amended by Law No. 151 of 2026, capital gains tax applies to capital gains realized from the disposal of quotas held in companies or securities that are not listed on the Egyptian Stock Exchange, whether such gains are realized in Egypt or abroad.
For purposes of determining the capital gain, disposal includes, pursuant to Article 46 bis (4), as amended by Law No. 151 of 2026, a sale, exchange, or any other form of disposal of securities or quotas held in companies. Accordingly, the scope of the tax is not limited to a sale but extends to other forms of disposal that result in the realization of a capital gain.
Tax Treatment of Non-Residents
Article 46 bis (3), as amended by Law No. 151 of 2026, also regulates the tax obligations of non-residents in connection with the disposal of unlisted securities or quotas held in companies. Where the disposer is a non-resident, the disposer is required to calculate and remit the tax on the capital gains realized within sixty days from the date of the transaction, in accordance with the procedures prescribed by the Executive Regulations of the Egyptian Income Tax Law.
This provision does not apply to capital gains realized by a non-resident from the disposal of Treasury bills, as the same Article expressly provides that such gains are outside the scope of this tax.
Accordingly, determining the tax treatment applicable to a non-resident first requires identifying the asset subject to the disposal. Where the disposal concerns quotas held in a company or an unlisted security, the rules prescribed under Article 46 bis (3) shall apply. Capital gains arising from the disposal of Treasury bills, however, fall outside the scope of this tax pursuant to the express exclusion provided under the same Article.
Determination of Capital Gains and Acquisition Cost
Article 46 bis (4) of the Egyptian Income Tax Law, as amended by Law No. 151 of 2026, provides that taxable capital gains arising from the disposal of unlisted securities or quotas held in companies are determined based on the difference between the sale price, exchange value, or value resulting from any other form of disposal and the acquisition cost, after deducting the brokerage commission.
Accordingly, the capital gain is determined by comparing the value resulting from the disposal with the acquisition cost of the relevant asset, after deducting the brokerage commission. The acquisition cost therefore constitutes a fundamental element in determining the amount of taxable capital gain.
Article 46 bis (4), as amended by Law No. 151 of 2026, further establishes a specific rule where the sale, exchange, or disposal price is determined based on fair value. In such case, an amount equivalent to the credit and discount rate announced by the Central Bank of Egypt for each year of the holding period of the securities or quotas held in companies is added to the acquisition cost, provided that the securities or quotas held in companies are not disposed of before the lapse of three years.
The same Article further provides that the acquisition cost shall be calculated on the basis of the weighted average, in accordance with the rules prescribed by the Executive Regulations of the Egyptian Income Tax Law.
Capital Gains Realized Abroad and Foreign Tax Paid
Capital gains arising from the disposal of securities or quotas held in companies may also be subject to tax abroad. In this regard, Article 46 bis (6) of the Egyptian Income Tax Law, as amended by Law No. 96 of 2015, regulates the deduction of foreign tax paid in respect of income received from abroad by a resident individual, including income falling within the scope of Article 46 bis (3).
Pursuant to Article 46 bis (6), as amended by Law No. 96 of 2015, foreign tax paid on such income may be deducted from the tax payable in Egypt on the same income, within the limits of the calculated tax.
The provision does not permit losses realized abroad to be deducted from the taxable base in Egypt for the same tax year or any subsequent tax year. It also does not permit the offsetting of profits realized abroad in one country against losses realized in another country.
Additionally, this provision according to the wording of Article 46 bis (6), is limited to foreign tax paid on income received by a resident individual and, accordingly, does not extend to juridical persons unless there is an independent legislative basis providing otherwise.
Conclusion
Following the amendment introduced by Law No. 151 of 2026, the current capital gains tax regime is primarily based on identifying the asset subject to the disposal. Article 46 bis (3), as amended by Law No. 151 of 2026, covers capital gains arising from the disposal of quotas held in companies and securities that are not listed on the Egyptian Stock Exchange, whether such gains are realized in Egypt or abroad. The Article also establishes a specific obligation for non-residents to calculate and remit the tax within sixty days from the date of the transaction, while excluding capital gains arising from the disposal of Treasury bills.
Under Article 46 bis (4), as amended by Law No. 151 of 2026, the capital gain is calculated based on the difference between the value resulting from the disposal and the acquisition cost, after deducting the brokerage commission. The Article also establishes specific rules for disposals based on fair value, including the addition of an amount linked to the credit and discount rate for each year of the holding period, subject to the three-year holding requirement, as well as the weighted-average method for determining the acquisition cost.
Where a resident individual realizes qualifying capital gains abroad and pays tax on such gains abroad, Article 46 bis (6), as amended by Law No. 96 of 2015, permits the foreign tax paid to be deducted from the Egyptian tax payable, within the limits of the calculated tax, while prohibiting the deduction of foreign losses or the offsetting of profits realized in one foreign country against losses realized in another.
Accordingly, the tax treatment of capital gains arising from the disposal of securities and quotas held in companies depends on the asset subject to the disposal, the nature of the disposal, the acquisition cost, the status and residence of the disposer, the place where the gain is realized, and the applicable tax rate, in accordance with the Egyptian Income Tax Law No. 91 of 2005, as amended.