How will Nigeria’s Finance Bill affect insurers? Chinedu Ezomike of Andersen Tax explains

Nigeria’s Senate has successfully passed the Finance Bill after extensive deliberations, despite facing opposition from various stakeholders in different sectors. The bill, which has been in the making for three years, aims to align the country’s tax policies with global best practices. Chinedu Ezomike, Partner and Head of Commercial Practice Group at Andersen Tax, sheds light on how this Finance Bill will impact the insurance sector within Nigeria. Ezomike emphasizes the importance of dynamic tax reforms that support business growth and competitiveness. He highlights that it is in the government's interest to create an environment where businesses can thrive and contribute to revenue generation. The Finance Bill addresses various aspects of taxation, with much focus on Value Added Tax (VAT) but also includes positive reforms that impact sectors like insurance. One key point Ezomike brings to the forefront is the impact of the Finance Bill on government revenues. While he doesn't provide exact figures, he anticipates an increase in revenue as the reformed tax laws lead to improved tax administration and clarity for businesses. Certainty in tax treatment, especially for sectors like insurance, is crucial for fostering a conducive business environment. The insurance sector, in particular, stands to benefit from the Finance Bill as it addresses longstanding issues of inequitable taxation. Previous discriminatory provisions that limited tax benefits for insurance companies are now being reformed to align with other industries. For instance, the ability to carry tax losses forward indefinitely and claim expenses on a fairer basis will enhance the sector's competitiveness. Furthermore, the abolition of the special minimum tax is seen as a positive development for attracting new investors and capital into the insurance industry. Simplified tax laws and a level playing field will likely drive profitability and investor interest in the sector. Ezomike underscores the importance of tax reforms in fostering voluntary compliance and simplifying tax obligations for businesses. While the Finance Bill brings positive changes, there are also areas of contention, such as the new tax on dividends for petroleum companies and the VAT increase. These aspects have raised concerns within specific sectors and are subject to ongoing discussions in the legislative process. The bill aims to harmonize taxes, address double taxation issues, and provide incentives for investments in critical sectors like infrastructure. Notably, the Finance Bill includes provisions to facilitate investments in infrastructure, particularly in areas like housing. By streamlining tax regulations for real estate investments and trusts, the bill aims to stimulate capital flows into the housing sector and bolster the country's capital market. Additionally, the focus on raising government revenues through VAT reforms underscores the need for a balanced tax system that promotes economic growth. In conclusion, Nigeria's Finance Bill represents a step towards creating a more competitive business environment through tax reforms. The changes introduced aim to enhance industry competitiveness, attract investments, and streamline tax administration. As stakeholders navigate the implications of the Finance Bill, ongoing dialogues and refinements in the legislative process will be vital to ensuring a tax framework that supports sustainable economic growth.