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Insurers seek FG’s support to amend tax law

By on October 6, 2014

The Nigerian Insurers Association has urged the Federal Government to waive some sections of the Companies’ Income Tax Act 2007 in order to save the industry from collapse as the law places a heavy tax burden on underwriting firms operating in the country.

Chairman, NIA, Mr. Godwin Wiggle said this was making the industry unattractive to investors when he led a delegation of the governing council on a courtesy visit to the Minister of State for Finance, Mr. Bashir Yuguda.

He said the law placed a cap on expenses and claims payable by insurance companies, adding that it was discouraging foreign direct investment in the insurance sector.

Wiggle urged the minister to assist the insurance industry by setting in motion the process of amending the law to reflect present day realities and in line with global trends and best practices.

The NIA helmsman who also congratulated the minister of state on the conferment of the national award of Commander of the Order of the Niger on him by President Goodluck Jonathan.Wiggle said, “We are here to congratulate you on the conferment of the national award as Commander of the Order of the Niger by President Goodluck Jonathan. I must say that it is a well-deserved award given your rich background and antecedents.

“Whilst congratulating you, I wish to take this opportunity to draw the attention of the minister of state to the crippling effects of CITA 2007 on insurance business. The law expects insurance companies to pay 20 per cent of their premium as tax irrespective of expenses or losses incurred. We believe that it is not only punitive, it is also anti-investment.”

The NIA chairman explained the effect of the law in the loss carried forward in the underwriters’ books in Section 14(7) of the CITA, 2007 as amended, which restricts the number of years over which an insurance company can carry forward its tax losses to four years.

He implored the minister to convene a meeting of key stakeholders which would include the Federal Inland Revenue Service, the National Insurance Commission, the Federal Ministry of Finance and the Nigerian Insurers Association with a view to critically assessing the relevant provisions of the Act and making recommendation on the way forward.

The Commissioner for Insurance, Mr. Fola Daniel, also appealed to the minister to assist insurance companies resolve heavy taxations placed on them by the law.

Daniel said, “I will much appreciate your intervention. We have tried so much in the past but we have not been able to make much headway on the matter. I am sure that with your intervention, there will be light at the end of the tunnel. We will be grateful if the minister will do this for the insurance companies.”

Yuguda welcomed the NIA delegation and expressed surprise that such a law had been in existence since 2007 without any concrete move to address it. He promised to give his support to the association and provide the political push to help the insurance industry solve the problem.