LIAM urges tax break for group employee insurance and fair treatment of local reinsurers

The Life Insurance Association of Malaysia has submitted a proposal urging the government to exempt group employee insurance schemes from one outlet service tax, citing potential cost reductions for employers and a chance to increase coverage among workers, particularly in small and medium enterprises. LIAM notes that less than half of the workforce currently benefits from such schemes, creating a significant protection gap.

In addition, the association highlights a disparity in tax treatment between Malaysian-based reinsurers, which pay income tax on reinsurance profits, and foreign reinsurers operating without a permanent establishment, which avoid comparable taxes. This imbalance, LIAM warns, may undermine the competitiveness of domestic reinsurers and the resilience of the local insurance ecosystem. The group recommends measures to achieve tax neutrality and a level playing field, while considering Malaysia’s overall tax objectives and international developments. The budget containing these proposals is slated for tabling on October 9, 2026.