Capital Market Sectors:
Products & Services
Recipient Incentives Reference Legislation
Sukuk Issuer Tax deduction on expenditure incurred for the issuance of sukuk pursuant to the principles of Ijarah or Wakalah (comprising a mixed component of asset and debt) until the year of assessment 2018. Income Tax (Deduction for Expenditure on Issuance of Sukuk) Rules 2015– P.U. (A) 318
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
(i) to or in favour of a special purpose vehicle; or
(ii) 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:

  • 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.
  • 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.
  • 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.
  • 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 exempt from income tax.

i. Income Tax Act 1967 (Revised 1971) –Section 60I
ii. Income Tax (Exemption) (No.14) Order 2007 – P.U. (A) 180
Issuer of retail sukuk Tax deduction on additional expenses incurred on the issuance of –

  • retail sukuk structured pursuant to the principle of Murabahah or Bai’ Bithaman Ajil (based on the concept of Tawarruq), Mudharabah, Musyarakah, Istisna’ or any Shariah principle other than the principle mentioned in (ii) below,
  • retail sukuk structured pursuant to the principle of Ijarah, or Wakalah comprising a mixed component of asset and debt,

approved or authorized by the SC from the year of assessment 2016 until the year of assessment 2018.

Income Tax (Deduction for Expenditure on Issuance of Retail Debenture and Retail Sukuk) Rules 2016
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 2020.

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) Rules 2017
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
  • Fund management companies managing approved Islamic funds of foreign investors are granted income tax exemption on income received from fund management services 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.
  • Fund management companies managing Islamic funds of local investors are granted income tax exemption on income received from fund management services 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

Islamic Fund Management [Business Trust or Islamic Real Estate Investment Trust (REIT)] Qualifying company Qualifying companies managing approved Islamic funds of business trust or REIT are granted income tax exemption on income received from fund management services 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
Business Trust Business Trust Trustee-manager acting on behalf of a business trust is granted stamp duty exemption on all instruments executed by such trustee-manager in relation to the transfer of any business, asset or real property to a business trust for the purposes of initial offering of the business trust approved by the SC on or after 1 January 2013 and not later than 31 December 2017. Stamp Duty (Exemption) (No.7) Order 2013
Non- Resident Experts in Islamic finance Non-Resident Experts in Islamic finance Income tax exemption is granted for income received by non-resident experts in Islamic finance until 31 December 2016. The experts have to be verified by the MIFC Secretariat. Income Tax (Exemption) (No.3) Order 2008 – P.U. (A) 114