Insurance Sector Stakeholders Seek Improved Tax Regime
By Dipo Olowookere
Government has been called upon to collaborate with stakeholders in the insurance sector to work out ways of streamlining the taxation applicable to the industry.
This appeal was made recently in Lagos at the one-day seminar organized by Leadway Assurance in conjunction with PricewaterhouseCoopers (PwC).
The various major players from the nation’s Insurance industry, who were at the meeting, also sought more support of government to support the industry’s growth and development.
It was gathered that the event was put together to examine Taxation Matters within the Insurance Value Chain.
Executive Director, General Insurance, Leadway Assurance, Adetola Adegbayi, who was one of the panellists, argued that the insurance industry currently suffers from a complex tax structure that has always resulted in multiple taxations without understanding the complexity of insurance placements.
She cited the example of deducting withholding tax from “re-insurance commission” as a fundamental problem because the practice did not recognize the fact that such “commissions” are not earnings but “a reserve against reinsurance credit risk” for premium liabilities passed through the books of the insurer.”
“Brokers, agents, insurers and re-insurers pay different taxes, all of which principally come from the premium paid by one entity – the insured – due to the nature of the insurance value chain,” she further explained.
Adegbayi, therefore, cautioned that unless all stakeholders came together “to collate the entire structure of the tax burden along the insurance value chain,” multiple taxations would continue to pose a threat to the well-being of the industry.
Another panellist, Partner, West Africa Tax Leader at PricewaterhouseCoopers, Mr Taiwo Oyedele, urged the government to support the insurance industry through a review of the specific tax regime that concerns the sector, adding that as the industry was saddled with bearing the nation’s risks, it should not also be burdened with taxes.
According to him, Nigeria’s poor social infrastructure continues to create multiple incidences of socio-economic dislocations that impact heavily on the survival of the insurance sector.
In his words, “the growing rate of crimes in the society increases claims settlement, just as bad roads often lead to accidents, which increase claims. In the same way, poor health care brings about high death rate, thereby pushing claims up.”
While acknowledging the concerns raised by players in the industry, the Federal Inland Revenue Service (FIRS) called for a yearly tax interactive session with the insurance industry to help address all tax related concerns beleaguering the insurance industry.
Executive Chairman of FIRS, Mr Babatunde Fowler, represented at the event by the Regional Coordinator FIRS, Mrs Toluwalase Akpomedaye, noted that such sessions have helped foster understanding with other sectors of the economy. He assured stakeholders that the FIRS was willing to work with the insurance industry to ensure growth and development, stressing that all the tax concerns expressed by operators in the industry were presently being looked into.
Mr Fowler also charged operators in the industry to support the government by paying all necessary taxes, adding that the economy needed taxes to thrive. President, Nigerian Council of Registered Insurance Brokers (NCRIB), Shola Tinubu, also supported the call for an annual tax session in the industry, pledging to take the message to the Nigerian Insurers Association (NIA) and the Institute of Loss Adjusters of Nigeria (ILAN).
In closing, Managing Director, Leadway Assurance Company Limited, Oye Hassan-Odukale, expressed gratitude to attendees for the poignant tax issues raised during the event, and to the regulator representatives for responding succinctly to each one. He further stated that the organization of the event by Leadway was in demonstration of the company’s desire to work with all stakeholders towards ensuring a clearer understanding of tax matters which in turn would foster development in the insurance industry and by extension the economy.
He noted that the proposed annual tax interactive session was a brilliant fall-out of the meeting and expressed the confidence that this would really help improve the relationship between FIRS and the insurance industry.
“I agree that there is need for the industry to have a yearly interactive forum with FIRS and the Lagos State Inland Revenue Service (LIRS),” he submitted.