Belanjawan 2027: Persatuan minta skim insurans pekerja berkelompok dikecualikan cukai

Malaysia's Life Insurance Association (LIAM) has urged the government to exempt group employee insurance schemes from the 8% service charge in the 2027 budget. Current statistics show that less than half of the country's workforce is protected under group insurance schemes, creating a significant protection gap. LIAM believes that such an exemption would reduce the cost of providing insurance benefits to workers and encourage more employers to provide and maintain individual insurance coverage.

According to LIAM, the proposed exemption could also help alleviate the financial burden on household economies in the event of death, disability, or medical expenses. The association also argues that a wider access to private health protection would complement public health care, enabling protected workers to receive treatment at private health facilities while reducing pressure on public health resources.

LIAM further urges the government to review the tax service fee for domestic insurance companies (originally based in Malaysia) compared to foreign companies providing this convenience to the Malaysian market. Domestic insurance companies based in Malaysia are subject to Malaysian income tax on profits, while foreign subsidiaries without a permanent establishment in Malaysia can compete in the domestic market without facing the same income tax liability.

The difference in tax fees could lead to unequal overall tax revenues for domestic insurance companies competing in the same market, potentially weakening their competitiveness. LIAM also emphasizes the importance of a strong domestic insurance sector for Malaysia as it helps maintain domestic market capacity, strengthens domestic risk management capabilities, and contributes to the resilience and development of the local insurance ecosystem.

Therefore, LIAM requests the government to consider measures to encourage higher tax rates and create a more balanced competition environment between domestic and foreign insurance companies in Malaysia. This aligns with Malaysia's broader income tax objectives and international cooperation developments. The 2027 budget is scheduled to be presented on October 9.