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Tuesday, 15 October 2019

FinMin finalizes universal healthcare tithe

LEGISLATION WATCH- Get ready for changes to the tithe that funds the Universal Healthcare Act. The Finance Ministry said yesterday that it has drafted changes to the funding system for the new universal health insurance system, but stopped short of making clear what those changes are, according to a report in the domestic press. The system is currently funded by a new 0.25% tithe on revenues imposed on all companies.

The ministry acknowledged that the changes are being made after pressure from industry associations, including the Federation of Egyptian Chambers of Commerce (which has the rather unfortunate acronym FEDCOC), the Cairo Chamber of Commerce and the Union of Egyptian Investors Associations.

What was business asking for? We had said back in March that lobby groups including the Federation of Egyptian Industries had proposed new mechanisms including that the 0.25% tithe on revenues (which is not tax deductible) be replaced with a 1% surtax on net profit.

The ministry’s proposal will now be reviewed by cabinet before it heads to the House of Representatives for debate. In a separate statement yesterday, the ministry said the new system is heavily endorsed by the nation’s political leadership.

Background: Two government sources had told us in September that the amendments would see the 0.25% tithe on revenues capped at EGP 10k per company. 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 met with backlash from the business community. 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.

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