The government has been urged to suspend the implementation of the impending Value Added Tax (VAT) on life insurance policy, to allow for further consultation with industry players and stakeholders.
The Chief Executive Officer (CEO) of KEK, an insurance brokerage firm, Ali Shaibu, who made the call, said there was the need for the government to hold more discussion with stakeholders of the insurance industry before the implantation of the tax.
He made the appeal in an interview with The Ghanaian Times, after the 35th anniversary celebration of KEK on Friday in Accra, which was on the theme: ‘35 Years of Excellence – Celebrating our Journey So Far’.
Mr Shaibu also noted that the introduction of VAT on life insurance would affect its coverage and penetration in the country.
He said life insurance was not compulsory and the introduction of VAT on it would affect the uptake of insurance, and suggested that micro insurance should be exempted from VAT.
Again, Mr Shaibu indicated that some people might not patronise life insurance policy because it was not compulsory and this would thwart the efforts to increase insurance coverage in the country.
He stressed that imposing VAT on life insurance would affect the premium of insurance brokers as some corporate bodies and individuals might decide not to buy life insurance which is not compulsory.
Furthermore, Mr Shaibu said KEK had led the charge in introducing a lot of policies and regulations regarding the market.
The Managing Director of Coronation Insurance Ghana Limited, Dr Yaw Adom-Boateng, underlined that there was the need to educate the insurance industry players on the modalities of the implementation of VAT on life insurance.
He said VAT on life insurance, would bring additional cost of about 21 per cent to insurance consumers.
The Finance Director of Telecel Ghana, Mr Samuel Owusu, expressed worry that the new tax handle, if implemented would increase the cost of doing business.
The Commissioner of Insurance, Dr Abiba Zakariah, paid glowing tribute to the founder of KEK for his contributions to insurance industry in the country.
The Government announced VAT on insurance in the 2025 budget and economic policy, and the implementation will start by the end of next month.
The topics discussed included ‘The journey of insurance broking in Ghana and KEK’s contribution,’ and ‘VAT on Non-Life Insurance Premiums.’
BY KINGSLEY ASARE
