Bangladesh Insurance Association on Wednesday proposed that the government in coming budget for financial year 2017-18 should reduce corporate tax for the insurance companies to 25 per cent instead of existing 40 per cent.
Besides, the association also demanded for scrapping the 5 per cent tax provision on insurance policy benefits of policyholders, 15 per cent value added tax and 5 per cent source tax on agents’ commission, and 40 per cent tax on insurance company’s excess operating expenses.
The insurance association came up with the proposal at a pre-budget press briefing held at its office in Dhaka.
BIA president Sheikh Kabir Hossain presented the proposals in the briefing where its vice-president Ahasanul Islam, executive committee members Muzaffar Hossain Paltu, AKM Monirul Hoque, Nurul Alam Chowdhury and Nasir Uddin Ahmed, among others, were present.
Kabir said that the sales of life insurance policies have been on the decline since 2014 when the government imposed 5 per cent gain tax on policy benefits as policyholders prefer depositing funds into banks rather than purchasing life insurance policy.
Unless the tax provision is scraped, life insurance companies would be at stake for survival, he said.
Speaking about the corporate tax issue, the BIA president said although the insurance companies were not comparable with the bank and financial companies in terms of profit generation, 40 per cent corporate tax was imposed on the insurance companies illogically.
Insurance companies are not that sound like banks and financial institutionsand the government should reduce corporate tax on insurance companies to 25 per cent so that the entities can survive, he said.
Kabir also requested the government to stop duel taxation on the commission earnings of insurance companies’ agents as they have to pay 15 per cent value added and 5 per cent income tax on their earnings as commission.
Retaining 15 per cent VAT on insurance company agents’ earnings would worsen their livelihood, he said.
At the same time, he also called for streamlining insurance company agents’ income in line with the government’s policy, that exempted individual earnings of Tk 2.50 lakh from income tax, as insurance company agents’ have to pay source tax on each and every receipt whether the amount is Tk 1,000 or 10,000.
The BIA president also proposed for the increase of tax free dividend income limit to Tk 1 lakh from existing Tk 25,000.
Ahasanul Islam said that the government should reduce corporate tax rate on insurance companies to 25 per cent considering the sector’s contribution to the country’s economy.
Although the insurance companies paid insurance claims worth around Tk 1,000 crore, the development of the sector was hindered due to lack of positive publicity, he said.
Policyholders should communicate with insurance companies and with the regulatory authority before filing cases with any court for claim settlement, Ahasanul said.
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