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Palestine Exchange warns of the negative effects of applying the new income tax law and is seriously considering the idea of cancelling the upcoming road show in London.

2012-01-23

Commenting on the amendments of the Income Tax Law and its impact on the Palestinian stock market, The Chief Executive of Palestine Stock Exchange, Mr. Ahmed Aweida stated that the stock market is seriously considering cancelling the road show that is expected to be organized in the British capital, London next April, explaining that the law is desperately affecting Palestine stock exchange and the public dealing with it.

Aweida explained in a press statement, that the new law will affect the public shareholding companies in terms of imposing additional financial burden on them which will negatively reflect their profitability and therefore help them to reconsider the size of their investments or profits distributing to shareholders. He added, the stock market has reported an excellent performance despite the difficult circumstances; the level of dividend or bonus shares in the last two years were the best, where the rate of return on investment in the past five years reached 6%, while the year 2010 recorded about 13.5%, which is an important attraction element that the stock market is communicating strongly to the investment funds abroad.

Regarding the direction of the stock market to cancel the upcoming road show-promotional tour-, Aweida said: in the last three years, the PEX deliberately organized a number of promotional tours in some regional and international capitals, which aimed primarily to promote the success story of the Palestinian stock market and listed companies by highlighting the competitive advantages of the Stock Exchange, and drawing the attention of international investment funds and institutional investors in order to attract investments to the listed shares based among factors that had characterized the stock market. And perhaps the most important factors are : the absence of taxes on profits derived from investment in stocks in addition to the distinctive return on investment achieved by the investor. Aweida said "these benefits are threatened by the new amendment to the tax Law", and expressed the fear of Palestinian investors’ immigration to neighboring markets that are more competitive as well as the reluctance of international investment funds from entering the stock exchange.

Aweida called for the need to reconsider the new law, especially the issue of taxes on profits realized from the investment in stocks, saying: It is useful at this time that the government in cooperation with the PEX and the various related parties create incentive policies and legislation to encourage investment in the Palestinian economy in general and the Palestinian stock market in particular, noting that the current situation is not likely to impose new taxes as it adds new burdens and lead to undesirable consequences in the light of the current political and economic situation