Authorities have introduced a new tax structure on certain life insurance and takaful payouts, targeting early withdrawals and short-term claims.
Under the revised policy, payouts received within one year of policy initiation will be subject to a 15% tax. Meanwhile, payouts made after one year but before seven years will face a reduced tax rate of 10%.
However, the policy provides key exemptions. Death-related claims, disability benefits, and payouts made after seven years of policy maturity will remain fully exempt from taxation.
Officials state that the move aims to discourage short-term withdrawals and promote long-term savings through insurance and takaful products.
The policy is also expected to strengthen the formal insurance sector by encouraging policyholders to retain coverage for longer periods.