Ministry Contemplates VAT on Non-life Insurance Claims

Mar 4 , 2023


Officials of the Ministry of Finance are considering imposing a 15pc Value Added Tax (VAT) on non-life insurance claims paid by insurance companies, according to a bill up for discussion with stakeholders last week. The bill, which was debated at the Ministry's headquarters on King George Street, could be a reversal of the exemption previously granted to insurers from paying VAT. Officials acknowledged that insurance companies had been exempted from paying VAT on non-life insurance claims for the past two decades, but noted that the insurance industry had since matured. However, representatives from some insurance companies see the move could discourage policyholders. Wasihun Abate, the discussion moderator and tax advisor, has given insurers a fortnight to make a supported argument with evidence including data from other countries. It remains to be seen whether this proposed bill will be enacted and how it could impact both the insurance industry and policyholders in Ethiopia.


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