KUALA LUMPUR (Dec 18, 2013): No tax is imposed for the withdrawal of money from the Private Retirement Scheme (PRS) after reaching the retirement 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 parliament lobby refuting claims by some quarters that 25% 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 RM147.3 million.
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 meets the needs of customers and gains 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.