The Managing Director of KEK Insurance Brokers and President of the Insurance Brokers Association of Ghana (IBAG), Shaibu Ali, has reiterated the association’s commitment to continue engaging government stakeholders, including the Ghana Revenue Authority (GRA) and Ministry of Finance, for a review of the 15% Value Added Tax (VAT) imposed on non-life insurance products.
Speaking at the 35th Anniversary Thanksgiving Service of KEK Insurance Brokers, Mr. Ali expressed concern over the potential negative impact the tax could have on insurance uptake, particularly among low-income earners and underserved communities.
According to him, the demand for insurance is relatively inelastic, and an increase in cost driven by the VAT could discourage individuals and businesses from purchasing non-compulsory policies.
“If the price goes up too much, people can simply choose not to insure, especially when the policies are not compulsory,” he warned.
Mr. Ali argued that microinsurance and personal insurance products, which typically cater to low-income earners and cost as little as 10 to 15 Ghana cedis, should have been exempted from the VAT to protect vulnerable consumers.
He noted that although the insurance industry supports the government’s need to generate revenue, he described the policy’s current implementation as a “test year,” suggesting that adjustments may be necessary based on its performance and impact.
“We believe that by the time the next national budget is prepared, there will be grounds to revisit the tax policy and exempt certain categories of insurance products,” he said.
The IBAG president confirmed that several engagements have already taken place between the association and the GRA, but acknowledged the challenge of balancing fiscal policy with the growth and accessibility of insurance products.
The 15% VAT on non-life insurance took effect earlier this year as part of government efforts to increase domestic revenue.
However, stakeholders across the insurance industry have raised concerns that the policy could stifle insurance penetration in a market where coverage already remains low.
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