Briefing on 2008 Budget Highlights

Briefing on 2008 Budget Highlights

Following the tabling of the 2008 Budget, LIAM organised a briefing for Chief Executive Officers and Chief Financial Officers to enable them to better understand the changes in the tax system.

Held on 17 September 2007, the briefing was conducted by PricewaterhouseCoopers and it was attended by 45 participants from member companies and BNM.

In the Budget 2008, the Government has proposed to further reduce the corporate tax rate to 25% in 2009. The Budget has introduced tax set-off to eliminate the double taxation impact on investment income for the life insurance industry. Previously, the investment income is taxed once in the life fund and another time when the transfer is made to the shareholders.

The Government has also announced the introduction of a single-tier tax system with effect from the year of assessment 2008. Under this system, profits are only taxed at the company's level and the dividends are exempted from tax. Given the nature of life insurance taxation, the single-tier tax system has in fact resulted in double taxation. The industry is pursuing with the Government to find ways to eliminate this unintended impact.