Stamp duty on a group insurance policy is Shs 35,000 irrespective of the number of beneficiaries under the policy.
This is the ruling by the Tax Appeals Tribunal on medical insurance. The tribunal arrived at this conclusion in its ruling delivered on February 14 in the case arising from a stamp duty dispute between UAP Old Mutual Insurance Limited and Uganda Revenue Authority.
UAP challenged a stamp duty assessment of Shs 1.7bn issued by URA in May, 2023. URA alleged that while UAP had issued 53,432 medical insurance policies, it had only paid stamp duty on 4,731 medical policies.
UAP, on the other hand, through its lawyers Joseph Luswata, Sophia Nampijja and Winston Churchill Ruhayana, argued that the huge difference in the number of medical policies issued by UAP and those alleged by URA was because URA had erroneously treated each beneficiary under a group medical policy as a separate policyholder and every endorsement as a separate policy for which stamp duty should be paid separately.
The lawyers further contended that under a group policy the entity/employer that takes out the policy, is the insured and policyholder, not the various beneficiaries under the policy.
They invited the tribunal to find that the stamp duty payable by the insured/policyholder is Shs 35,000 irrespective of the number of beneficiaries under a group policy. Given the significance of the case on medical insurance and the insurance sector, the Uganda Insurers Association (UIA) applied and was granted leave by the Tribunal to give evidence in support of UAP’s case.
Agreeing with UAP, the tribunal chaired by Cristal Kabajwara, found that an interpretation that stamp duty is payable for every beneficiary under a group policy is far-fetched, and not supported by the law. The tribunal concluded that stamp duty on a group policy is Shs 35,000 irrespective of the number of beneficiaries under the policy.
The tribunal also made some interesting observations in passing. It emphasized the importance of affordable medical insurance and guided that tax collection efforts must align with public policy and the government’s broader agenda.
The tribunal noted that one of government’s policy objectives in Vision 2040 is availing Ugandans affordable quality healthcare through a shift from a public-centred to a public- private-partnership arrangement of delivering healthcare. According to the tribunal, increasing the cost of group health insurance would, in addition to not being supported by the law, run counter to the government’s agenda.
Denis Twambale, the head of medical insurance at UAP, welcomed this decision as a significant win for the insurance sector and employees who are the main beneficiaries of affordable medical insurance.
So in the first place why did URA impose the tax without considering these realities? So, had UAP not gone to courts, URA would have the right to collect the funds from their bankers based on wrong assumption s?