Dear Sir, how does the recent introduction of VAT affect my insurance policy?
In the recent budget reading for the year 2014/2015, government scrapped the 18 per cent value added tax (VAT) exemption in the insurance sector. This is a cost that will now have to be borne by the customer. This increment however does not apply to life and medical premiums to boost the uptake of such insurance as it offers social protection and savings increment. The 2013 Finscope report shows that most Ugandans depend on borrowing and donations from friends and family or selling of assets to deal with resolvable risks.
This notwithstanding, of the eight insurance companies offering life and medical products in Uganda, you risk paying VAT on your life insurance policy such as loan protection cover, mortgage protection etc. If your policy is held by what is called a composite insurance company. These are companies licensed as “Life and Non-life” by the Insurance Regulatory Authority. In this case the premiums written and receipted by such a company attracts an 18 per cent additional tax from 1st July 2014 onwards.
In Uganda composite companies are mandated to demerge their life and general business by September 2014. I would advise that you check to see that your policy is held by a predominantly life insurance company.
For more information on insuring your future, please contact; email@example.com, www.facebook.com/uaplifeadvisor or TYPE UAP (leave space) Message (Send to 6933)
The writer is the Corporate Sales Manager for UAP Insurance.