The Independent Uganda: You get the Truth we Pay the Price
Kampala, Uganda | THE INDEPENDENT | Insurance players in Uganda have said that the high taxes imposed on insurance premiums are kicking them out of business. An insurance premium is the amount of money an individual or business pays for an insurance policy.
Insurers say that on top of every premium is a charge to cover stamp duty, training, Value Added Tax (VAT), Insurance Regulatory Authority (IRA) payments and withholding tax. This they say has led to an increase in the cost of insurance policies.
Ambrose Tuhairwe, the Head of Tax and Treasury at Old Mutual says that they were forced to increase the cost of insurance services because of taxes citing the recent increase in withholding tax from 6-10 percent at the start of this financial year. Tuhairwe adds that the increase in the cost of insurance policies affected the demand for insurance policies.
Bob Bananura, a portfolio manager at ICEA insurance group says the number of insurance policies sold per executive has gone down largely because the increase in the tax reduced the commission earned per sales executives since July 2020.
He says a policy sold at one million Uganda Shillings will be inflated by 35,000 Shillings stamp duty, withholding tax of 10 percent, VAT of 18 percent, the Insurance Regulatory Authority fee 1.5 percent and training levy of 1.5 percent.
Bananura adds that the taxes raise the insurance policy cost to 1,345,000 Shillings. George Tumusiime, a trader in Kisekka market says he cannot afford the cost of insurance policies despite having plenty of knowledge about the policies they offer.
Ibrahim Lubega Kaddunabbi, the Chief Executive Officer (CEO) Insurance Regulatory Authority (IRA) says they have petitioned the government to reduce the taxation on insurance policies in vain.
He says despite registering an annual growth of 31 percent, with insurance penetration increasing from 0.81 percent to 0.84 percent in 2019, the insurance sector may lose it all if some taxes are not reduced or scrapped off to attract small and medium enterprises with affordable insurance policies.
Uganda has close to 30 insurance companies.
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