Dhaka, Monday, 24 January 2022

Growth of insurance sector hinders due to negligence

Growth of insurance sector hinders due to negligence

Apparel Report: The country’s insurance sector is overburdened with taxes imposed at several levels, which hinders the growth of the sector.

Bangladesh Insurance Association (BIA) in its pre-budget press meet recently made the observation and said the sector could not grow to its potential due to the government's negligence. Placing a six-point demand, the sector wants withdrawal of the 5.0 per cent gain tax on deposit holder's profit, 15 per cent VAT against agent commission, 5.0 per cent source tax and tax on excess expenses, reduction of corporate tax and an increase in the tax free dividend income limit.

BIA said deposit holders do not get lucrative returns from the insurance companies, as their main benefit is accident coverage. When there is no accident, the policy holders are given very little amount in return at maturity of their deposits. The government imposed 5 per cent gain tax on the depositor's income in 2014, which is unacceptable. No other country has such a practice, according to the BIA budget proposals.

Such taxes make people reluctant; policy holders would much rather deposit their money with the banks, the BIA said. The government imposed dual taxes on insurance agents through 15 percent VAT and 5 percent source tax.

Insurance companies also have to pay 40 percent income tax on excess expense. There is a provision for fines by Insurance Development and Regulatory Authority for management expenses beyond the limit.