Govt may cut life insurance cos' tax rate: Muhith

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FE Report
The government will consider lowering high income tax rate on life insurance companies as the sector is still immature, said Finance Minister Abul Maal Abdul Muhith Monday.
"The tax rate is very high compared with those in other countries and we will look into the issue," he said after a meeting with executive committee members of the Bangladesh Insurance Association (BIA).
As many as 60 private insurance companies are operating in the country and out of them 19 are life insurance ones and they pay 42.5 per cent income tax.
The minister said the government will soon formulate rules of Insurance Act and Insurance Regulatory Authority and Development Act to pave way of smooth functioning of the sector.
Mr Muhith said there should be a 'roadmap' to promote the sector and it should be done by the BIA.
"I am impressed with the achievement by the sector and it can be more flourished with proper plan," he said.
About the insurance activities conducted by non-government organisations (NGOs), he said the government will look into any anomaly in their operations.
"NGOs don't pay any tax or there is no limit on management expenditure as they plough back all the money into the social operations," he said adding, "The government will consider if their service is provided at a cheap rate or in a luxurious way."
Mr Muhith said there should not be any practice of enlisting of insurance companies with banks as it is unfair.
"If any bank does not want to do business with a certain insurance company, it can do it but there should not be any enlistment policy with bank," he said.
BIA Chairman AKM Rafiqul Islam said the sector wants to help the government in implementing public-private partnership (PPP) projects.
"The sector has huge liquidity and it has the ability to invest in PPP projects," he said.
The sector needs government patronage to develop human resources, Mr Rafiq said adding, "We don't have any full-time faculty in the training institute because of fund crisis."
The life insurance companies earned Tk 46 billion premium in 2009 whereas it settled claims of Tk 11.7 billion. They paid Tk 1.4 billion as income tax to the public exchequer.
General insurance companies earned Tk 12.23 billion as premium while they settled Tk 4.14 billion claims and paid Tk 1.7 billion to the public exchequer. They also invested Tk 14.65 billion in different sectors.
The insurance sector employs about 1.4 million people.