EXCLUSIVE- Companies’ solidarity contribution could soon be calculated on net income, rather than the current revenue-based calculation. The finance and investment ministries are nearing an agreement to restructure the solidarity contribution, shifting the levy from a percentage of gross revenues to a tax on net income, a government source tells EnterpriseAM.

The proposal currently on the table would set the contribution at 0.5% to 1% of net income, payable alongside the annual corporate income tax return. This would replace the current system, which charges 0.025% of revenues.

The shift answers a private sector demand

WHY THIS MATTERS- Under the current revenue-based model, companies have to pay up even if they’re making losses. The contribution is currently treated as a cost that cannot be deducted to lower your tax bill, creating an additional burden that erodes capital and liquidity, our source explained.

What’s the hold up? A tug-of-war over funding. Investment Minister Hassan El Khatib first announced plans to overhaul the contribution back in September 2024, but the proposal stalled with the bureaucracy. The solidarity contribution provides roughly 60% of the actual funding for the Universal Health Ins. System. Authorities were hesitant to tweak the formula for fear of creating a funding gap, but a compromise was reached, with the Finance Ministry agreeing to cover any shortfall in revenue resulting from the change. That will ensure the insurance system’s rollout timeline stays on track, we were told.

Next steps: A draft bill is being prepared for cabinet review, after which it will be sent to the House of Representatives when the next parliament is seated in January.

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