Category: Business Daily

The Employment and Labour Relations Court has dealt a blow to 208 former employees of the Kerio Valley Development Authority (KVDA), dismissing their application to sue the State corporation over alleged underpayment of retirement benefits due to missing the legal filing deadline.

The workers had sought court permission to file their case out of the three-year statutory timeline after discovering discrepancies in their 2018 Voluntary Early Retirement (VER) package payments.

While most people stand before their mirrors in the morning as a matter of grooming, Nixon Nyadiero Sekoh does more than just spruce himself up. He fixes his gaze at his reflection and talks to himself.

‘I look at myself and say, ‘Sekoh, you are fearfully and wonderfully made. Sekoh, you have the image of God. Sekoh, God died for you. Sekoh, you can do all things – not some; all things – through Christ who strengthens you,” he tells the BDLife.

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.

Three borrowers have brought a class action lawsuit against microlender Mogo Auto Ltd, claiming that its lending model and debt recovery practices are predatory, unfair and unconscionable commercial conduct, contrary to equitable principles and public policy.

The borrowers claim that the firm, which finances the acquisition of cars and motorcycles, imposes exorbitant compound interest rates that allegedly exceed prevailing market and statutory limits.

The families of retired President Uhuru Kenyatta and former Central Bank of Kenya governor Philip Ndegwa have gained Sh12.4 billion in paper wealth in five days of trading as the share price of NCBA Group surged 38.5 percent amid a buzz generated by buyout reports.

NCBA’s stock climbed to Sh96.25 on Wednesday from Sh69.50 at the opening of the Nairobi Securities Exchange (NSE) last Tuesday when news of its potential acquisition by Africa’s largest bank, Standard Bank Group, hit the market.

Households and businesses could soon pay more for insurance cover as the Insurance Regulatory Authority (IRA) moves to raise annual fees for insurers, brokers, agents and other intermediaries for the first time in 30 years.

Under the IRA proposed insurance regulations and guidelines, the license fees and annual operating fees for insurance and reinsurance companies will rise 3.3 times and three times respectively. The draft is also proposing to increase the annual fees for intermediaries such as agents, brokers and risk assessors by up to 10 times.

Kenyan farmers and small exporters shipping coffee, tea and other agricultural commodities to Europe have been handed a reprieve after the European Commission extended the compliance timeline for smaller firms under the new anti-deforestation law by one year.

Exporters of agricultural products in Kenya, who heavily rely on the European market, have been under pressure to comply with the European Union Deforestation Regulation (EUDR), which was initially set to take effect by the end of this year.

The owner of Makini Schools is set to establish a university in Kenya as part of its expansion in the education sector, a move that will see it enter the country’s tertiary learning segment for the first time.

South African multinational ADvTECH, which bought Makini Schools in 2018, also owns Crawford International and the recently acquired Regis Runda Academy that is being rebranded to Makini.

The Nairobi Expressway operator reported a wider net loss of Sh1.84 billion in the six months to December, as revenues from the 67,298 vehicles that use the road daily failed to cover its debt and operational costs.

Treasury disclosures show motorists paid Sh7.16 billion in toll fees during the period against Sh9 billion in costs, including loan repayment, operations and maintenance expenses.

Kenya has overtaken the Democratic Republic of Congo (DRC) in peak electricity demand, making it the top consumer in the East African Community (EAC), where it is the regional economic powerhouse.

Data from the Energy and Petroleum Regulatory Authority (Epra) shows that peak demand for electricity in Kenya jumped by 139 Megawatts (MW) to 2,316MW in the year ended June, at a time that of the DRC remained stagnant at 2174.17MW.