EXCLUSIVE- Reading the fine print on 0.25% healthcare tax — who pays what: With the tax season fast approaching, the Finance Ministry has outlined the fine print on the 0.25% healthcare tithe it will collect this year to fund the new national healthcare system under the Universal Healthcare Act.

(And yes, the tithe is 0.25%, not 0.0025% — the Finance Ministry confirmed to Enterprise earlier this month that the taxman will take EGP 2.5 out of every EGP 1,000 in sales revenues. The tax rate that originally ran in the Official Gazette was incorrect, and the ministry has since issued a correction.)

As it stands, all companies are to pay the flat 0.25% tax on revenues this year except under certain circumstances and in some sectors, a senior government source told Enterprise. The Finance Ministry will set up a tax formula for these outliers on a case-by-case basis. The ministry has also preemptively set up special committees to handle issues arising from the tax, the source added.

So, who qualifies for some relief from the tax?

Companies making losses: If your bottom line is red, you won’t have to pay the tax this year.

Commissions, fees and dual revenues: For services and commissions — including financial advisory, consulting or brokerage — the ministry is trying to avoid taxing both the client and the service provider on shared revenues from the same project or activity. So if both the client and the provider earn revenue from an activity, they will split the 0.25% tithe between them, according to a formula that has yet to be revealed by the ministry.

Hotel management companies and hotel owners will also be able to avoid double taxation of the same revenue when a second party is brought on to manage a resort. Joint venture projects will also be subject to a similar arrangement, whereby multiple companies will split the 0.25% tax between them.

What about foreign companies? Foreign companies operating in Egypt (with or without a local subsidiary) will pay the full 0.25% tax on revenues earned in Egypt, the source said. It has yet to be determined whether they will pay the tax in foreign or local currency.

Change could be in the office for next year: The tax rate will be amended next year, the source added. An actuarial study is currently being conducted to determine what the new healthcare tax will be. He said that the ministry is exploring the possibility of taxing net profits instead of revenues. Companies could be categorized by the size of their net profits, with each category paying a different rate.

For the full breakdown of taxes under the Universal Healthcare Act, you can check out our primer here.