Pakistan: Finance Minister proposes tax revamp for insurers
Source: Asia Insurance Review | Jul 2016
Finance Minister Ishaq Dar has proposed that the income of insurance companies from all sources be subjected to the same corporate tax rate from the new financial year 2016-17.
Previously, different categories of income of insurers were taxed at rates varying from 10% to 32%. While Mr Dar did not mention what the rationalised tax rate is, it is understood that the rate would be 31%, in line with the corporate tax rate.
In his 2016-17 Budget speech delivered on 3 June, Mr Dar said that commission paid to life insurance agents would be taxed at the rate of 8% for those who file tax returns, representing a reduction from 12%.The 8% rate would be applicable to filers on commission receipts up to PKR500,000 (US$4,800), to facilitate the low income group.
He stated that around PKR9 billion (US$86 million) in premiums will be paid through the Prime Minister’s Health Insurance Scheme. This programme was launched on 31 December 2015 in collaboration with provincial governments. Under it, the federal government would provide insurance cover for tertiary health care and hospitalisation for several ailments. Initially the scheme will be started in 23 districts of Pakistan. It will be gradually increased to cover all the poorest segments of society.