Section 61 Nigeria Tax Act 2025

Section 61 of the Nigeria Tax Act 2025 is about Insurance trade or business. It provides as follows:

(1) An insurance business shall be taxed as a –
(a) general insurance company, whether proprietary or mutual, other than a life insurance company; or
(b) life insurance company:

Provided that the profits on which tax may be imposed for an insurance business shall be in accordance with section 6 or 17 of this Act.

(2) The profits on which tax may be imposed, in the case of –
(a) a general insurance, shall be ascertained in accordance with the provisions of subsection (3) as if the whole premium and investment incomes of the company were derived from Nigeria; and
(b) a life insurance, shall be ascertained in accordance with the provisions of subsections (4) and (5) as if the whole investment and other incomes were received in Nigeria and all the expenses and other outgoings of the company were incurred in Nigeria.

(3) For a general insurance business, the profit on which tax may be imposed shall be ascertained by taking the gross premium and other income receivable, less reinsurance, and deducting from the balance so arrived at, a reserve for unexpired risks, determined in accordance with subsection (9)(a) and other deductions allowed under subsection (9)(b) and Chapter Two of this
Act.

(4) For a life insurance business, the profits on which tax may be imposed shall be the investment income, and other income, less the management expenses, including commission.

(5) Any amount distributed in any form as dividend from an actuarial revaluation of unexpired risks or from any other revaluation shall be deemed to
be part of the total profits of a company engaged in life insurance business.

(6) The company shall provide the Service with full particulars of any revaluation carried out, including a copy of the actuary’s revaluation certificate, not more than three months after an actuarial revaluation of unexpired risks or any other revaluation has taken place.

(7) Where an insurance company carries on a life class and a general or non-life class insurance business, the funds and books of accounts of one class shall be kept separate from the other as though one class does not relate to the other class, and the annual tax returns of the two classes of insurance businesses shall be made separately.

(8) Each class of insurance shall be assessed separately as life insurance assessment or non-life insurance assessment, and in respect of each class of insurance business, where there are more than one type of insurance in the
same class, they form one type of business and the loss from one class shall
not be allowed against the income from another class of insurance business,
provided that the loss shall be available to be carried forward against the profits
from the same class of insurance business.

(9) An insurance company, other than a life insurance company, shall be allowed to deduct from its premium the following reserves for tax purposes –

(a) reserve for unexpired risks, calculated on a time apportionment basis of the risks accepted in the year ; and

(b) for outstanding claims and outgoings, an amount equal to the total estimated amount of all outstanding claims and outgoings, provided that any amount not utilised towards settlement of claims and outgoings shall be added to the total profits of the following year.

(10) An insurance company, in respect of its life insurance business, shall be allowed to deduct the following from its investment income and other
incomes –
(a) an amount which makes a general reserve and fund equal to the net
liabilities on policies in force at the time of an actuarial valuation;

(b) an amount which is equal to 1% of gross premium earned or 10% of net profits, whichever is greater, to a special reserve fund and accumulated until it becomes the amount of the statutory minimum paid-up capital; and