ZAMBIA: THE INSURANCE SECTOR AS A SOURCE OF REVENUE
In 2016, the Government introduced an insurance premium levy at a rate of 3% of the insurance payable on both general and life insurance contracts. The insurance premium levy substituted VAT on insurance.
Five years down the line, in the 2022 National Budget, the Minister has proposed to abolish the current applicable insurance premium levy and reintroduce VAT on property and non-life insurance contracts at 16%.
Further, to increase revenue and to promote the growth of the local re-insurance sector in Zambia, the Minister has introduced a 20% withholding tax on re-insurance payments to foreign re-insurers. This is aimed at encouraging the placement of reinsurance contracts with local re-insurers.
Statistics from the Insurers Association of Zambia (IAZ), a member organisation for all licensed insurer and re- insurer companies in the country, indicate that there are 34 insurance companies currently operating in Zambia: 10 of which operate in life insurance and 19 in non-life activity. The market also involves five reinsurers.
To successfully effect the above proposals, Government will review and amend relevant legislation including the Insurance Premium Levy Act and Value Added Tax Act, among others.