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

The Star (Kenya) - - News - BRIAN OTIENO @Yo­bramos4

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.

/ FILE

AKI ex­ec­u­tive direc­tor Tom Gichuhi dur­ing a past me­dia brief­ing at Crowne Plaza Ho­tel

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