What
is the impact of GST on takaful industry in terms of contribution rate?
Malaysian Takaful Association (MTA) had issued a press statement dated
20 March 2015 regarding the impact of Goods and Services Tax (GST) of 6% on
general and family Takaful business in Malaysia effective 1 April 2015. The statement can be summarized as follows:
1. In general,
contributions on general takaful are subjected to GST while family takaful is
exempted. In other words, all
participants under general takaful will have to pay an additional 6% on their
contribution due to GST.
2. All fees and
charges imposed on investment linked type of family takaful products such as
certificate fee, fund management fee, switching fee, etc are subjected to GST. This will resulted in slightly higher gross
contribution due to those implications but the additional amount is less than
6% of the total contribution.
3. Contributions
on any riders such as critical illness, medical, personal accident, etc.
attaching to family takaful products are subjected to GST even though the basic
takaful product is not affected. Those
riders are usually categorized as general takaful products.
4. Contributions
for all family takaful coverage such as death and permanent total disability
are exempted from GST.
