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Tuesday, 17 September 2019

Egypt mulls amending corporate healthcare tithe to impose EGP 10k cap across the board

EXCLUSIVE- FinMin mulls amending corporate healthcare tithe to impose across-the-board cap at EGP 10k: The Finance Ministry is considering introducing amendments to the Universal Healthcare Act that would set an across-the-board limit on the healthcare tithe paid by businesses to fund the new universal healthcare system, two government sources tell Enterprise. The amendments would see businesses pay the 0.25% levy on revenues, but the payment would be capped at EGP 10k, regardless of the size of the company or its revenues. Under the current framework, businesses will be charged the 0.25% levy on their revenues, which will not be tax deductible for this tax season. Loss-making companies will not be exempt from the payment.

The ministry had previously suggested imposing the cap at EGP 100k, but brought the figure down to EGP 10k when the proposal was met with backlash from the business community. The new ceiling is expected to reduce business’ tax burden, our source said. Businesses had previously lobbied to transform the 0.25% levy into a surtax on pre- or post-tax profits.

When is this coming into effect? According to our sources, the ministry plans to implement the changes in January, meaning they would affect the next tax collection season but would be included in the state’s tax revenues for the current fiscal year.

Background: The government began rolling out its EGP 600 bn health insurance plan in Port Said in July, and more governorates will be added gradually over the course of the next 11-13 years. The ministry started collecting taxes (including the 0.25% tithe) to fund the scheme this fiscal year. The government had said in July that it would postpone talks on setting a cap on the tithe until the House of Representatives new legislative session, which begins on 1 October.

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