The State minister for Investment, Dr Gabriel Ajedra, has said government remains open to reviewing Value Added Tax (VAT) on insurance products so as to ensure the country’s levy regime is harmonised in the region to attract more investors.
Speaking during the Uganda Insurers Association (UIA) and the Insurance Institute of Uganda (IIU) second Insurance Open Day and Career Fair in Kampala on Saturday, Dr Ajedra said the Finance ministry and Uganda Revenue Authority will continue to dialogue in order to look for a suitable position to enable government not to lose taxes but also to allow insurance growth.
“It is important that tax regimes are harmonised to ensure that Uganda remains regionally and internationally attractive to new investors. We are part of the global system. We are integrating as East African Community and Common Market for East ad Southern Africaso we must be compatible,” Dr Ajedra said.
During the June Budget reading, the government introduced an 18 per cent cost as VAT on insurance products which players argued would discourage people from buying covers.
The VAT came about after exemptions were scrapped off in the financial year 20142015 to enable the sector contribute to over 80 per cent locally financed budget amid donor aid cuts.
At 0.65 per cent, Uganda’s insurance penetration is one of the lowest in the world.
The low penetration is attributed to poor claim settlement that has characterised the sector in the past before the introduction of Insurance Regulatory Authority, which has created awareness about the products.
SOURCE: Daily Monitor