Egypt parliament looking to make 0.25% healthcare tithe tax-deductible
LEGISLATION WATCH- House looking to make 0.25% healthcare tithe tax-deductible: The House of Representatives is set to discuss within the next few days amendments proposed by Rep. Mohamed El Sewedy that would make tax-deductible the 0.25% tithe on revenues that companies are required to pay to finance the new national healthcare system, according to local media reports. The bill would also, if passed, add a clause to the Income Tax Act reflecting this change. The House planning, budgeting and health committees are expected to meet soon to review the proposed amendments, according to unnamed parliamentary sources.
Reminder — the tithe is 0.25%, not 0.0025%: The Finance Ministry confirmed to Enterprise earlier this year 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.
Background: The state’s EGP 600 bn health insurance plan mandated under the Universal Healthcare Act will be rolled out incrementally throughout Egypt over the course of 11-13 years, but the Finance Ministry is expected to start collecting special taxes (including the 0.25% tithe) designed to fund the scheme during the current fiscal years. As it stands, all companies are to pay the 0.25% flat tax on revenues this year except under certain circumstances and in some sectors, a senior government source told Enterprise in January, and as it stands the 0.25% levy does not count as an expense that would reduce a company’s pre-tax profit. The Finance Ministry will set a tax formula for outliers on a case-by-case basis. Among those eligible for some relief for the tax are companies making losses, joint venture projects, and services or commissions in which both a client and service providers make shared revenues from the same project or activity.