Page 46 - LIAM Annual Report 2021

Life insurance association of MaLaysia 44

rePort of tHe ManageMent coMMittee

taX issues

Budget 2022

Following the announcement of Budget 2022 by the Ministry of Finance, the following issues arising from the Finance Bill will
affect the industry:
1. Prosperity Tax/Cukai Makmur and
2. Withholding Tax on payments made to agent, dealer or distributor - Section 107D

Following a joint presentation by LIAM, PIAM and MTA through the appointment of PricewaterhouseCoopers (PwC) in December
2021, the insurance industry has been granted a special grace period by the Inland Revenue Board to make remittance for
withholding tax from January 2022 to June 2022.

taX issues affecting tHe industry

The industry appointed PwC in 2020 to submit the proposals The industry received favourable outcome in its appeal where:
on the following tax issues to IRB and the Ministry of Finance
(MOF): On item ii above, the Minister of Finance Malaysia via his
letter dated 28 April 2021, granted the tax exemption on
i. Reinsurance/ReTakaful Discount and Experience Refund the single tier dividend income and income derived from
on 14 May 2020; investment of deferred annuity scheme, which is included
ii. Exemption on Single Tier Dividend and; in the actuarial surplus of life fund/takaful family fund, that
iii. Exclusion of Unit-Linked Fund from Section 110B on is transferred to the shareholder fund, has decided that the
6 November 2020. tax exemption will be terminated with effect from the tax
assessment year of 2022.

On item i above, the MOF issued a letter on 25 February
2022 confirming that reinsurance / retakaful discount and
experience refund under reinsurance / retakaful contracts are
amounts received by life / family takaful fund in connection
with the life insurance / family takaful policies reinsured. In
this regard, they should not be regarded as incidental income
in nature under Section 60(8) and Section 60AA(13) of the
Income Tax Act 1967 and are not subject to income tax.