Are banks trying to find a way around higher taxes?
Shocker: Banks are looking for a way around higher taxes. The Federation of Egyptian Banks is in talks with the Finance Ministry to allow its members to deduct as an expense the EGP 2.5/1,000 healthcare levy on their top line, multiple sources told Al Mal. If the levy is not expense deductible, this would mean banks would pay an effective tax rate of 0.3%, higher than the 0.25% stipulated by the Universal Healthcare Act. The federation is also looking to know whether the levy will be calculated and paid on quarterly, semi-annual or annual basis.
Do banks have reason to act all fidgety? Bank profitability could take a hit from a recently proposed amendment to how they account for income from their investments in government debt. The change could result in a c.37% effective tax rate for a model bank, compared to a current 24%, in a scenario run by Shuaa Securities Egypt. The healthcare levy in question is calculated on gross revenues, making it substantial for banks.
Background: All companies will be subject to a new tax to support the government’s plan to make health insurance mandatory as part of the Universal Healthcare Act. The plan take 11-13 years to implement. The services under the scheme will debut next May in the Canal cities. Tap or click here for our exclusive primer breaking down all the taxes under the new legislation, which will range from nationwide corporate tax to industry specific levies.