The insurance sector in East Africa is experiencing changes driven by evolving tax laws, regulatory reforms, and the adoption of new financial reporting standards, particularly International Financial Reporting Standards (IFRS) 17.
This summary outlines the main tax and regulatory developments across Kenya, Uganda, Tanzania, and Rwanda, highlighting the implications for life, general, and reinsurance companies. Kenya’s insurance sector is regulated under the Insurance Act (Cap 487) and overseen by the Insurance Regulatory Authority (IRA). Recent legislative reforms have supported the growth of the life insurance industry.
One notable development is the ongoing legal challenge regarding contributions to the Social Health Insurance Fund, set at 2.75 percent of employees’ gross salaries. The High Court has highlighted concerns about possible double taxation, with the matter pending before the Court of Appeal.
The Finance Act 2025 introduced two major changes: an increase in withholding tax on insurance premiums paid to non-residents from 5 percent to 10 percent, and a five-year cap on carrying forward tax losses. The former may lead to higher costs for policies involving non-resident reinsurers, while the latter could adversely affect health insurers relying on long-term loss recovery for pricing.
From an IFRS 17 perspective, the Kenyan Income Tax Act is generally accommodating, allowing deductions for actuarially computed reserves, so the adoption of IFRS 17 has not significantly disrupted tax computations for insurance companies.
Uganda
Uganda’s insurance market is regulated by the Insurance Regulatory Authority of Uganda under the Insurance Act (Cap 191). A major recent development is the introduction of Takaful and Retakaful Guidelines in August 2024, enabling Shariah-compliant insurance solutions, which operate on a mutual risk-sharing model.
While IFRS 17 does not specifically define takaful contracts, it covers mutual insurance arrangements, meaning takaful entities must comply with IFRS 17 for insurance risk accepted and also refer to IFRS 15 for service fees.
For tax purposes, contributions, commissions, and investment returns are taxable under Section 16 of Uganda’s Income Tax Act (Cap 340), with a 15 percent withholding tax applied to contributions paid to non-resident reinsurers or retakaful operators. Takaful operations must carefully classify services for optimal tax compliance.
By
Stephen Waweru
Senior Manager in Tax and Regulatory Services
KPMG Kenya Advisory Services Ltd
The insurance sector in East Africa is experiencing changes driven by evolving tax laws, regulatory reforms, and the adoption of new financial reporting standards, particularly International Financial Reporting Standards (IFRS) 17.
This summary outlines the main tax and regulatory developments across Kenya, Uganda, Tanzania, and Rwanda, highlighting the implications for life, general, and reinsurance companies.
Kenya
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Kenya’s insurance sector is regulated under the Insurance Act (Cap 487) and overseen by the Insurance Regulatory Authority (IRA). Recent legislative reforms have supported the growth of the life insurance industry.
One notable development is the ongoing legal challenge regarding contributions to the Social Health Insurance Fund, set at 2.75 percent of employees’ gross salaries. The High Court has highlighted concerns about possible double taxation, with the matter pending before the Court of Appeal.
The Finance Act 2025 introduced two major changes: an increase in withholding tax on insurance premiums paid to non-residents from 5 percent to 10 percent, and a five-year cap on carrying forward tax losses.
Read: IRA to review impact of new accounting rules on insurers
The former may lead to higher costs for policies involving non-resident reinsurers, while the latter could adversely affect health insurers relying on long-term loss recovery for pricing.
From an IFRS 17 perspective, the Kenyan Income Tax Act is generally accommodating, allowing deductions for actuarially computed reserves, so the adoption of IFRS 17 has not significantly disrupted tax computations for insurance companies.
Uganda
Uganda’s insurance market is regulated by the Insurance Regulatory Authority of Uganda under the Insurance Act (Cap 191). A major recent development is the introduction of Takaful and Retakaful Guidelines in August 2024, enabling Shariah-compliant insurance solutions, which operate on a mutual risk-sharing model.
While IFRS 17 does not specifically define takaful contracts, it covers mutual insurance arrangements, meaning takaful entities must comply with IFRS 17 for insurance risk accepted and also refer to IFRS 15 for service fees.
For tax purposes, contributions, commissions, and investment returns are taxable under Section 16 of Uganda’s Income Tax Act (Cap 340), with a 15 percent withholding tax applied to contributions paid to non-resident reinsurers or retakaful operators. Takaful operations must carefully classify services for optimal tax compliance.
Tanzania
Tanzania has enacted significant reforms to bolster its domestic insurance industry, including a pivotal change in the Value-Added tax (VAT) regime: as of July 2025, reinsurance transactions are exempt from VAT, previously set at 18 percent.
This move is expected to make Tanzanian reinsurers more competitive and reduce the cost of risk transfer, potentially increasing local market retention.
The Insurance Act (Cap 394) now requires mandatory travel insurance for foreigners entering Tanzania, except for citizens of the East African Community and the Southern African Development Community states, at a standard rate of $44 for up to 92 days. This introduces a new revenue channel without a major short-term financial impact for domestic insurers.
The adoption of IFRS 17 has not resulted in major tax compliance challenges in Tanzania, as the Income Tax Act (Cap 332) aligns tax calculations with generally accepted accounting principles, including those of IFRS 17.
Rwanda
Rwanda Rwanda’s insurance sector, governed by Law 30 of 2021 and regulated by the National Bank of Rwanda (NBR), is undergoing rapid transformation. In February 2024, the NBR issued a guideline for IFRS 17 adoption, aiming for consistency in financial reporting.
However, Rwanda’s Income Tax Law has not been updated to reflect these accounting changes, creating timing differences between accounting profit and taxable income. For instance, premium revenue under IFRS 17 is deferred over the coverage period, which may not match invoicing records used for tax purposes, potentially triggering audit queries. VAT administration also presents challenges, as products subject to VAT may be cancelled and refunded, leading to VAT variances. Recent regulatory changes, notably the Ministerial Order of April 2025, exempt life and medical insurance premiums from the standard 18 percent VAT rate.
These reforms are expected to lower costs, enhance affordability, and promote insurance penetration, while aligning Rwanda’s practices with international standards.
Conclusion
The tax and regulatory environment for insurers across East Africa is characterised by ongoing legislative reforms and the adoption of IFRS 17.
While these changes bring both challenges and opportunities, insurers must remain proactive, engaging with regulators and building internal capacity to navigate the evolving compliance requirements and ensure long-term sustainability in a competitive market.