CITA 2007: NIA takes case to government

 

A cross section of Governing Council members led by the NIA chairman, Godwin Wiggle pose for photograph with the Minister of State for Finance, Ambassador Bashir Yuguda (CON) and Commissioner for Insurance, Fola Daniel when the NIA Chairman and members of the Governing Council paid a courtesy visit to the Hon. Minister of State for Finance in Abuja.

·        Min of State for Finance Promises to Intervene

Chuks Udo Okonta

The Nigerian Insurers Association (NIA) has appealed to the federal government to suspend or waive some sections of the Companies’ income Tax Act (CITA) 2007 to save the insurance industry from collapse as the law places a heavy tax burden on insurance companies operating in Nigeria, thus making it unattractive to investors.

A statement by NIA’s spokesman Davis Iyasere, said the Association’s position was made known to the government by the NIA chairman Godwin Wiggle who led a delegation of the Governing Council on a courtesy visit to the Hon. Minister of State for Finance, Ambassador Bashir Yuguda in his office in Abuja on Tuesday.

The NIA helmsman who also congratulated the Minister of state on the conferment of the national award of Commander of the Order of the Niger (CON) on him by President Goodluck Jonathan, said the obnoxious law placed a cap on expenses and claims payable by insurance companies, adding that it was discouraging foreign direct investment in the insurance sector.

Wiggle urged the Minister to assist the insurance industry by setting in motion the process of amending the law to reflect present day realities and in line with global trends and best practice.

“We are here to congratulate you on the conferment of the national award as Commander of the Order of the Niger by President Goodluck Jonathan. I must say that it is a well deserved award given your rich background and antecedents” Wiggle said.

He continued; “Whilst congratulating you, I wish to take this opportunity to draw the attention of the Hon. Minister of state to the crippling effects of CITA 2007 on insurance business. The law expects insurance companies to pay 20% of their premium as tax irrespective of expenses or losses incurred. We believe that it is not only punitive, it is also anti-investment” Wiggle stated.

The NIA Chairman’s position was supported with a brief presentation highlighting the following critical sections of CITA 2007 for the Hon Minister’s attention. They are: Loss carried Forward: Section 14(7) of the Companies Income Tax Act (CITA), 2007 as amended, which restricts the number of years over which an insurance company can carry forward its tax losses to four years.

From left: Deputy Chairman, Nigerian Insurers Association (NIA), Eddie Efekoha, Chairman Godwin Wiggle, Minister of State for Finance, Ambassador Bashir Yuguda and Commissioner for Insurance, Fola Daniel when the NIA Chairman and members of the Governing Council paid a courtesy visit to the Minister of State for Finance in Abuja.

 

Basis for Calculation of Unexpired Risk: Adoption of different basis for the computation of minimum tax payable by insurance companies. This is as specified in Section 14(8)(b) and Section 14(9)(c) of CITA 2007. This basis differs significantly from that adopted for other Nigerian companies. Minimum Tax: Section 14(8)(a) prescribing 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 and Deductibility: Section 14(8)(b) of CITA amendment provides for the restriction of other reserves, claims and outgoings for the purpose of computing taxes payable by insurance companies

Wiggle implored the Minister to convene a meeting of key stakeholders which will include the Federal Inland Revenue service, the National Insurance Commission, Federal Ministry of Finance and the Nigerian Insurers Association with a view to critically assess the relevant provisions of the Act and make recommendation on the way forward.

In his contribution, the Commissioner for Insurance, Fola Daniel appealed to the Honourable Minister to assist the insurance companies resolve the issue of heavy taxation placed on them by the law.

“I will very much appreciate your intervention sir. We have tried so much in the past but we have not been able to make much headway on the matter. I am sure that with your intervention, there will be light at the end of the tunnel. We will be grateful if the Hon Minister will do this for the insurance companies, sir,” he stated.

In his response, the Minister of State for Finance, Ambassador Yuguda welcomed the NIA delegation and expressed surprise that such a law had been in existence since 2007 without any concrete move to address it. He therefore, promised to give his support to the Association and provide the political push to help the insurance industry solve the problem.

“I am surprised that this law has been in existence since 2007. Yes, government wants income from taxes but not taxes that will kill businesses. Once I have your position paper on this matter, I will set up a Committee and I promise to give it my support and the needed political push to ease the process of addressing the issues you have raised,” he assured.