More Ugandans are embracing insurance after the introduction of Bancassurance
Government through the Ministry of Finance, Planning and Economic Development has proposed to Parliament 10% tax on commission paid by insurance companies to their agents.
The proposal is contained in the Income Tax Amendment Bill 2020 that was tabled by Minister of Finance, Matia Kasaija who took to the floor of Parliament to table amendments to five bills; Value Added Tax Amendment Bill 2020, Excise Duty Amendment Bill 2020, Stamp Duty Amendment Bill 2020 and Appropriation Bill 2020.
Government is seeking to amend section 9 of the Income Tax Bill by inserting a new section, to read; Withholding of tax on commission paid to an insurance agent. An insurance service provider who makes a payment of a commission to an insurance agent shall withhold tax on the gross amount of the payment at the rate.
Uganda’s insurance penetration- at a paltry 0.84% remains the lowest in East Africa.
Kenya’s insurance penetration stands at 3.4%, Tanzania’s 2.3% and Rwanda at 1%.
However, more Ugandans are embracing insurance after the introduction of Bancassurance.
The other group to be affected are owners of media houses and advertising agencies, with Government seeking to insert another clause in the Income Tax Amendment Bill to provide for withholding of tax on commission paid to an advertising agent.
“A person who makes payment for a commission to an advertising agent shall withhold tax on the gross amount of the payment at the rate prescribed,” Government proposed,
Further, the tax regime will require a withholding agent who makes a payment subject to withholding tax to furnish a return of withholding tax for every month in the Form specified by the Commissioner not later than fifteen days after the end of every month to which withholding tax relates.
While appearing before the Committee on Tuesday, Finance Minister Matia Kasaija revealed that both advertising agents and insurance agents will part with 10% of their gross pay, although he didn’t reveal how much money Government intends to generate from this tax regime.