Some insurance companies have received refunds to the tune of ₦1 billion from Nigeria’s Federal Inland Revenue Service (FIRS), following complaints of excessive taxation.
This was disclosed by the Chairman of the Insurance Association of Nigeria (NIA), Eddie Efekoha, who spoke to some journalists in Lagos, recently. According to him, the erroneous taxation occurred after the 2007 recapitalisation of the insurance industry.
“Following widespread complaints from operators that they are being over-taxed after the recapitalisation exercise initiated by the National Insurance Commission (NAICOM) in 2007, the industry body made spirited representations to the appropriate authorities in the country for a refund. Due to these efforts, some member companies have duly received a tax refund of almost ₦1 billion.” – Efekoha
He went further to disclose that his association is engaging the FIRS and the Federal Ministry of Finance to effectively “work out an amicable solution to spur robust growth of our industry.”
Meanwhile, the insurance industry is eagerly awaiting NAICOM’s harmonised ten year transformation agenda , he said. The harmonised plan is expected to facilitate growth in the sector. Note that the aim of the agenda is to grow the rate of insurance penetration to about 2.1%, up from less than 1%.
More on the challenges of excessive taxation
Note that excessive taxation has for a long time remained one of the long-standing issues in Nigeria. Asides the insurance sector, other sectors of the economy are equally affected.
A 2014 report by Nairametrics quoted the then Minister of Communication and Technology, Mrs Omobola Johnson, to have admitted that about 70% investments by Nigerian telecoms companies are typically used for the payment of taxes to the different tiers of government. According to her, this is one of the major challenges preventing the sector from growth.
She called for a review of the Nigerian tax system.
Interestingly, such calls has been ongoing since then. A 2015 article by The Guardian examined how Nigeria’s tax system is discouraging investment, even as the concerned government agencies were urged to, among other things, simplify the tax system, put more clarity on taxes that are payable, as well as getting rid of excessive taxation.
Meanwhile, in mid-2017, the FIRS introduced the Voluntary Asset and Income Declaration Scheme (VAIDS), in its determination to facilitate tax collection in Nigeria. Apparently, the VAIDS initiative turned out successful, as the FIRS disclosed earlier this month that it had realised about ₦30 billion, and raised Nigeria’s tax database to 19 million up from 14 million.
The Insurance Association of Nigeria was established in 1971 to serve as the umbrella body of all the insurance companies in Nigeria.
Efekoha became the Chairman two years ago, during which, the association has initiated and begun construction on the NIA Tower. Speaking on this issue, he made known his delight “that the NIA building project has moved from discussion to actual construction. That development represents the high point of my chairmanship of the NIA.”