Insurers want Sh3.5bn tax arrears written off
Taking the amount from insurance brokers and insurance firms will push them out of business, and the state will lose revenue
Insurance firms and brokers have appealed to the National Treasury to waive accrued excise tax arrears estimated at Sh3.5 billion, arguing the amount will cripple their operations.
The outstanding tax accrued between June 2013 and November last year, when they were required to deduct and remit excise duty on commissions earned by brokers. This followed amendment to the Customs and Excise Act. The law was, however, repealed by the National Assembly with modernised Excise Duty Act being enforced in December 2015.
The amount, they said, affects 30 insurance companies and 113 insurance brokers.
“Because brokers did not charge their clients for this tax, there is no way we will be able to repay it and still remain in business. It is going to erode our resources,” Association of Insurance Brokers of Kenya chairman Nelson Omolo said.
He spoke during the association’s 11th annual national seminar in Mombasa.
Executive director of Association of Kenya Insurers Tom Gichuhi said the lobby has been engaging the Treasury since last year, seeking to quash the demand letters by the Kenya Revenue Authority to insurance brokers.
KRA reportedly calculated the arrears at between Sh1.5 million and Sh200 million before issuing the demand letters.
Gichuhi said between June 2013 and November 2015, when the law was in place, duty was accumulating on direct commissions for insurance brokers, and re-insurance commissions for insurance companies.
He said insurance firms and insurance brokers did not pay the duty because there were no structures or regulations on how the tax was to be collected.
AKI executive director Tom Gichuhi during a past media briefing at Crowne Plaza Hotel