Incentives
Capital Market Sectors:
Products & Services
Recipient Incentives Reference Legislation
Sukuk

Issuer

Tax deduction on the expenditure or additional expenses incurred on the issuance of:

  1. a sukuk structured pursuant to the principle of Wakalah (comprising a mixed component of asset and debt)
  2. a retail sukuk structured pursuant to the principle of Wakalah (comprising a mixed component of asset and debt),

approved or authorised by the SC from the year of assessment 2021 until the year of assessment 2025.

Income Tax (Deduction for Expenditure on Issuance of Sukuk and Retail Sukuk Structured Pursuant to the Principle of Wakalah) Rules 2021– P.U. (A) 5

Issuer

All instruments relating to the issue of, offer for subscription or purchase of, or invitation to subscribe for or purchase, debentures approved by the SC and the transfer of such debentures are exempted from stamp duty.

Stamp Duty (Exemption) (No.23) Order 2000 – P.U. (A) 241

Issuer

To ensure neutrality with conventional schemes of financing, any duty chargeable on additional instrument pursuant to a scheme of financing approved by the SC is exempted provided that the scheme is in accordance with the principles of Shariah and such instrument is required for the purpose of complying with those principles.

Stamp Act – Schedule 1 “General Exemptions”

Issuer

To ensure neutrality with conventional schemes of financing, any gains or profits received and expenses incurred pursuant to the disposal of an asset or a lease, by or to a person, pursuant to a scheme of financing approved by the SC are exempted from tax provided that the scheme is in accordance with the principles of Shariah and such disposal is required for the purpose of complying with those principles.

Income Tax Act 1967(Revised 1971) – Sections 2(7) and (8)

Issuer/Originator

Any person is exempted from the payment of real property gains tax in respect of chargeable gains accruing on the disposal of any chargeable assets in relation to the issuance of private debt securities under Islamic principles.

Real Property Gains Tax (Exemption) (No.3) Order 2003

Issuer/Originator

Exemption to any person from the payment of RPGT in respect of chargeable gains accruing on the disposal of any chargeable assets

  1. to or in favour of a special purpose vehicle; or
  2. in connection with the repurchase of the chargeable assets, to or in favour of the person from whom those assets were acquired, for the purpose of securitization transaction.

Real Property Gains Tax (Exemption) Order 2001 – P.U. (A) 227

Issuer/Originator/SPV of an asset-backed sukuk

All instruments specified below which are executed on or after 1 January 2001 for the purpose of securitization transaction are exempted from stamp duty:

  1. Any instrument that operates to transfer, convey, assign, vest, effect or complete a disposition of any legal or equitable right or interest in or title to any asset or change or mortgage to or in favour of a special purpose vehicle.
  2. Any instrument that operates to create or effect any charge, assignment, trust deed or letter of guarantee or any other instrument or document for the purposes of credit enhancement.
  3. Any instrument that operates to transfer, convey, assign, vest, effect or complete a disposition of any of the rights in connection with the repurchase of the rights from a special purpose vehicle to or in favour of the person from whom the rights were acquired.
  4. Any other instrument or document in which a special purpose vehicle is a party to.

Stamp Duty (Exemption) (No.12) Order 2001

Issuer/ Special Purpose Vehicle (SPV)

Any source and income of an SPV established solely for the purpose of issuing Islamic securities (excluding asset-backed securities) are treated as a source and income of the company/originator.
Income derived by the SPV on the issuance of Islamic securities is exempted from income tax.

Income Tax Act 1967 (Revised 1971) –Section 60I
Income Tax (Exemption) (No.14) Order 2007 – P.U. (A) 180

Issuer of Sustainable and Responsible Investment (SRI) sukuk

Tax deduction for the expenditure incurred on the issuance or offering of SRI sukuk approved or authorized by, or lodged with, the SC for the year of assessment 2016 until the year of assessment 2023.
The tax deduction is applicable to SRI sukuk in which ninety percent of the proceeds raised from the issuance or offering of the SRI sukuk are used solely for the purpose of funding SRI projects as specified in the guidelines by the SC.

Income Tax (Deduction for Expenditure on Issuance or Offering of Sustainable and Responsible Investment Sukuk) (Amendment) Rules 2021 P.U. (A) 2

Originator

The company that established the SPV is given a deduction on the cost of issuance of the sukuk incurred by the SPV. The SPV must be established solely for the purpose of complying with the principles of Shariah in the issuance of Islamic securities.

Income Tax (Deduction on the Cost of Issuance of The Islamic Securities) Rules 2007 – P.U. (A) 176

Investor

Profit paid or credited to non-resident companies in respect of RM-denominated sukuk (other than convertible loan stock) approved by the SC is exempted from income tax.

Income Tax Act 1967 (Revised 1971)– Schedule 6 – Exemption from Tax: Section 33A

Investor

Profit paid or credited to any person in respect of non-Ringgit sukuk originating from Malaysia (other than convertible loan stock) and approved by the SC is exempted from income tax.

Income Tax Act 1967 (Revised 1971)– Schedule 6 – Exemption from Tax: Section 33B

Investor

Profit paid or credited to any individual, unit trust and listed closed-end fund in respect of sukuk (other than convertible loan stock) approved by the SC is exempted from income tax.

Income Tax Act 1967 (Revised 1971) – Schedule 6 – Exemption from Tax: Section 35

Islamic Fund Management

Fund management company

  1. Tax exemption on income derived from a business of providing fund management services to foreign investors in Malaysia from the year of assessment 2007 until the year of assessment 2020. The funds must be managed in accordance with Shariah principles and certified by the SC.
  2. Tax exemption on income derived from a business of providing fund management services to local investors in Malaysia from the year of assessment 2008 until the year of assessment 2020. The funds must be managed in accordance with Shariah principles and certified by the SC.

Income Tax (Exemption) (No.15) Order 2007 – P.U. (A) 199 and Income Tax (Exemption) (Amendment) Order 2016 – P.U (A) 104
Income Tax (Exemption) (No.6) Order 2008 – P.U. (A) 255 and Income Tax (Exemption) (Amendment) (No. 2) Order 2016 – P.U. (A) 105

Fund Management

Fund management company

Tax exemption on income derived from a business of providing fund management services for SRI funds in Malaysia from the year of assessment 2018 until the year of assessment 2020.

Income Tax (Exemption) (No. 5) Order 2018

Islamic Fund Management [Business Trust or Islamic Real Estate Investment Trust (REIT)]

Qualifying company

Tax exemption on income derived from a business of providing fund management services to business trust or real estate investment trust in Malaysia from the year of assessment 2014 until the year of assessment 2020. The funds must be managed in accordance with Shariah principles and certified by the SC.

Income Tax (Exemption) Order 2014 – P.U.(A) 150 and Income Tax (Exemption) (Amendment) (No.3) Order 2016 – P.U. (A) 106

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