By Ebere Nwoji
Stakeholders in insurance industry have called on the government to support the growth and development of the sector through harmonisation and streamlining of various taxes paid by the operating firms.
The call was made by the panelists and participants at the one-day seminar organised by Leadway Assurance in conjunction with PricewaterhouseCoopers (PwC) in Lagos to examine taxation matters within the insurance value chain
Executive Director, General Insurance, Leadway Assurance, Adetola Adegbayi, who was one of the panelists argued that the insurance industry currently suffers from a complex tax structure that has always resulted in multiple taxation without understanding the complexity of insurance placements.
She cited the example of deducting withholding tax from “re-insurance commission” as a fundamental problem, arguing that the practice did not recognise 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 explained.
Adegbayi, therefore, cautioned that unless all stakeholders come together “to collate the entire structure of the tax burden along the insurance value chain,” multiple taxation would continue to pose a threat to the well-being of the industry.
Also 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 incidence 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.
The Executive Chairman of FIRS, 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 int
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).