The
Income Tax (Sustainable and Responsible Investment Linked Sukuk) Rules 2024 (“
Rules”)
1 that permit deduction of expenditure incurred by a company
2 in issuing or offering Sustainable and Responsible Investments Linked Sukuk (“
SRI-linked Sukuk”) for ascertaining the company’s adjusted income were gazetted on 19 December 2024.
The Rules have effect for five years from the year of assessment 2023 until the year of assessment 2027. As announced during the 2023 Malaysian Budget (Appendix 7), the Rules seeks to provide an innovative Shahriah-compliant financing and to establish Malaysia as a regional hub for the issuance of SRI-linked Sukuk.
The Rules provide that for the purpose of ascertaining the adjusted income of a company from its business in the basis period for a year of assessment, a deduction shall be allowed for the expenditure incurred by a company on the issuance or offering of a SRI-linked Sukuk that is:
The deduction excludes any amount exempted under section 127(3A) of the Income Tax Act 1967 in respect of grants provided to finance external review expenditure
3 for the issuance or offering of the SRI-linked Sukuk.
A company is not eligible for the deduction if it has claimed a similar deduction under other rules made under section 154 of the Income Tax Act 1967 in the same year of assessment.
Comment
The Rules continue the government’s efforts to encourage sustainable financing through tax incentives for the issuance of SRI-linked Sukuk.
Alert by Victoria Low (Associate) of the Tax Practice of Skrine.