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Published: Wednesday December 18, 2013 MYT 6:11:00 PM
Updated: Wednesday December 18, 2013 MYT 8:07:11 PM

No tax on Private Retirement Scheme withdrawals after age 55

KUALA LUMPUR: There is no tax on money withdrawn from the Private Retirement Scheme (PRS) after the contributor reaches the age of 55 years.

Deputy Finance Minister Datuk Ahmad Maslan said the 8% tax imposed for withdrawal before 55 years was to curb early withdrawal of savings by retirees.

"The introduction of PRS effective Assessment Year 2012 is to encourage savings among the people. Withdrawal before 55 years will defeat the original objective to ensure that Malaysians have sufficient savings," he said in the Parliament lobby, refuting claims by some quarters that a 25% tax applies to contributors who withdraw money from PRS after reaching 55 years.

However, the early withdrawal tax may be waived for reasons such as death, emigration, serious and critical diseases, permanent disability and mental instability.

Ahmad Maslan said until Aug 31, there were 36,663 PRS contributors with savings amounting to RM147.3mil.

Malaysia's syariah framework and governance structure practised by financial institutions had also been emulated by Pakistan, Indonesia, Brunei and Bahrain.

 "The Islamic financial system thrives as it meet the needs of customers and has gained the trust of the foreign community. The government emphasised syariah aspects to support public confidence in the Islamic financial system," he said when replying to a question from Senator Datuk Dr Johari Mat in Dewan Negara.

The Islamic Financial Services Act 2013 contains provisions on the need for effective syariah compliance and governance by Islamic financial institutions.

As support for a strong Islamic financial system, the Syariah Advisory Council at Bank Negara and syriah committees of Islamic financial institutions were empowered to ensure that financial transactions surpassed the standards of syariah compliance. - Bernama

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