The Nigerian insurance operators are still making efforts to get a Presidential waiver on the full implementation of the Companies Income Tax (Amendment) Act 2007, pending the amendments being sought by the insurance industry.
Nigerian Insurers Association (NIA), the umbrella body of insurance companies in the country, had appealed to the Federal Government to suspend or waive some sections of the law in order to save the insurance industry from collapse. The insurers alarmed that the law places a heavy tax burden on insurance companies operating in Nigeria, thus making it unattractive to investors.
To achieve this aim, a delegation of NIA Governing Council met with former Minister of Finance, Mrs. Ngozi Okonjo-Iweala and the then Minister of State for Finance, Bashir Yuguda, in Abuja.
The association wants a meeting of key stakeholders which will include the Federal Inland Revenue Service, the National Insurance Commission, Federal Ministry of Finance and the NIA with a view to critically assess the relevant provisions of the Act and make recommendation on the way forward.
For some time now, the insurance operators have relentlessly been clamouring that the law should be revisited by the legislators at the National Assembly because they are not comfortable with certain provisions of the law which they consider inimical to the growth of the insurance industry.
The insurers are now collaborating with KPMG Professional Services with the aim of getting the Federal Inland Revenue Service (FIRS) to reconsider the Act.
The critical sections of CITA 2007 requiring amendment include Section 14(7) which restricts the number of years over which an insurance company can carry forward its tax losses to four years
Section 14(8)(b) and Section 14(9)(c) of the Act stipulate adoption of different basis for the computation of minimum tax payable by insurance companies. This basis differs significantly from that adopted for other Nigerian companies.
Section 14(8)(a) prescribes percentage basis of calculation of reserves for unexpired risks for tax purposes rather than time apportionment which is prescribed in Section 20(1)(a) of the Insurance Act 2003.
Section 14(8)(b) provides for the restriction of other reserves, claims and outgoings for the purpose of computing taxes payable by insurance companies.
The insurers are praying that the legislation should not be allowed to remain in its present form because it imposes huge tax burden on insurance companies to the extent that the premium income being paid by to arrange insurance contract is taxed.