Tax treatment

Property Financing – i
Bai’ Bithaman Ajil (BBA)
This contract refers to the sale of property 
on a deferred payment basis. The property 
chosen by the client is bought to the client at 
an agreed price which includes the bank’s 
mark-up (profit). The client may be allowed 
to settle payment by instalments within a 
pre-agreed period, or in a lump sum i.e. the 
monthly instalment of the bank’s selling price 
will not change throughout the tenure of the 
financing.
Leasing Arrangement
Types:
1. Operating leases
An agreement between:
a) a lessor who owns an asset and who 
wants to earn return without losing 
ownership; and
b) a lessee who needs to use the asset 
and who cannot afford to buy it or 
does not want to own it.
2. Financial leases
a) The lessee has the option to purchase 
the asset at the end of the lease.
b) The ownership of the asset is 
transferred to the lessee at the end 
of the lease term.
Ijarah
Some of the rules that Islamic leasing 
observed:
• 
The lessor continues to own the asset 
during the lease period i.e. the risk and 
obligations of ownership are borne 
by the lessor whereas the risk and 
obligations of use are borne by the 
lessee.
• 
The rental amounts must be determined 
and fixed at the start of the contract for 
the whole duration of the lease.
• 
The lease begins only when the leased 
asset is delivered to the lessee ant not at 
the point when payment is made or the 
lease contract is signed.

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