Tax treatment

5
Tax Treatment on
Islamic Finance 
in Malaysia
 
Overview of Islamic Finance
This publication seeks to provide some basic insights and understanding of Islamic Finance. The 
objective is not to go into substantive details but to enumerate some of the pertinent points that may 
need to be considered before undertaking Islamic Finance opportunities.
What is Islamic Finance?
In simple term, it is a form of finance that is based on Shariah or the body of Islamic law. It offers a way 
of conducting financial transactions which is Shariah-compliant and according to certain defined 
ethical values such as fairness (i.e. price manipulation is prohibited), transparency (i.e. adequate 
information disclosure is encouraged) and risk-sharing (i.e. mutual co-operation and benefit is 
encouraged).
In ensuring Shariah-compliant, five key principles are strictly observed: