Malaysia · Proposed legislation
Malaysia proposes extending Islamic fund-management relief at a lower exemption
On 9 October 2026, Malaysia’s Ministry of Finance proposed extending the Shariah-compliant fund-management exemption to years of assessment 2028–2030 at a reduced 40% of qualifying statutory income.
- Official document:
- Budget2027 Tax Measures,Appendix13; Income Tax(Exemption)OrdersNos6–8/2021 and107–109/2024
- Development date:
- 2026-10-09
A longer period, but a smaller exempt share
Budget 2027 Appendix 13 describes the existing 60% exemption through year of assessment 2027 and proposes three more years at 40%. This is not merely an extension: the exempt share would fall by 20 percentage points. The percentage applies to statutory income from qualifying management services, not the company’s total profits or its corporate tax rate.[1][5][6][7]
The existing framework comprises Income Tax (Exemption) Orders Nos. 6–8 of 2021, P.U.(A) 282–284/2021, made under Income Tax Act 1967 paragraph 127(3)(b). They cover Shariah-compliant management services for business trusts or REITs in Malaysia, local investors and foreign investors respectively. P.U.(A) 107–109/2024 extend relief to 2027 and introduce the 60% treatment from 2024.[2][3][4][5][6][7]
Current eligibility remains distinct from the proposal
The manager must currently be Malaysian-incorporated, resident in Malaysia and appropriately licensed. Annual Securities Commission certification is required, with at least two full-time employees in Malaysia, one holding a Capital Markets Services Representative’s Licence, and annual Malaysian operating expenditure of at least RM250,000. Separate qualifying-income accounts and tax-return obligations remain. Local and foreign investor categories have specific residence, citizenship and beneficial-ownership definitions: an investor label alone does not settle eligibility.[2][3][4][8]
The Securities Commission’s current certification framework also makes the Islamic fund-management and Shariah-compliant SRI fund-management exemptions mutually exclusive for the same fund and financial year. Groups should therefore identify the relevant management income and incentive route, rather than assume all fund-related revenue receives the same relief.[8]
For affected asset-management groups, the proposal would preserve a partial exemption after 2027 but increase the non-exempt share of the same qualifying income. Appendix 13 does not establish replacement eligibility rules for 2028–2030. Existing staffing, expenditure and certification conditions should not automatically be presented as verified future requirements; implementing orders must be checked before applying the revised relief.[1][2][3][4]
Official sources
- [1] Budget 2027 Tax Measures — Appendix 13
Ministry of Finance Malaysia · Document date: 2026-10-09
Appendix13 printed19/PDF18,fullcurrent-position/proposal/effective-date lines422–444 read; visual screenshot requested but no successful rendered image delivered. 9October official event separately verified MOF speech lines53/69.
- [2] Income Tax (Exemption) (No. 7) Order 2021
Attorney General's Chambers Malaysia / Federal Government Gazette · Document date: 2021-06-29
Englishparas1–6pp5–7,publiccurl/pdftotextread;webInternalError
- [3] Income Tax (Exemption) (No. 8) Order 2021
Attorney General's Chambers Malaysia / Federal Government Gazette · Document date: 2021-06-29
Englishparas1–6pp5–7,publiccurl/pdftotextread;webInternalError
- [4] Income Tax (Exemption) (No. 6) Order 2021
Attorney General's Chambers Malaysia / Federal Government Gazette · Document date: 2021-06-29
Actual original seven-page Federal Government Gazette instrument,29June2021,made25June; Englishparas1–4printed5–7 read in full; hosted copy, not adviser prose. Official2026SC Appendix5 independently corroborates exact instrument and amendment.
- [5] Income Tax (Exemption) (No. 6) Order 2021 (Amendment) Order 2024
Attorney General's Chambers Malaysia / Federal Government Gazette · Document date: 2024-04-05
Actual original three-page Federal Government Gazette instrument,5April2024,made8March; both-languageparas1–3 read in full. Extendspara1(2) toYA2027, insertspara3(2A)60% fromYA2024. Hosted MAICSA original copy, independently corroborated by SC2026Appendix5; not MAICSA commentary.
- [6] Income Tax (Exemption) (No. 7) Order 2021 (Amendment) Order 2024
Attorney General's Chambers Malaysia / Federal Government Gazette · Document date: 2024-04-05
Actual original three-page Federal Government Gazette instrument,5April2024,made8March; both-languageparas1–3 read in full. Extendspara1(2) toYA2027, insertspara3(2A)60% fromYA2024. Hosted MAICSA original copy, independently corroborated by SC2026Appendix5; not MAICSA commentary.
- [7] Income Tax (Exemption) (No. 8) Order 2021 (Amendment) Order 2024
Attorney General's Chambers Malaysia / Federal Government Gazette · Document date: 2024-04-05
Actual original three-page Federal Government Gazette instrument,5April2024,made8March; both-languageparas1–3 read in full. Extendspara1(2) toYA2027, insertspara3(2A)60% fromYA2024. Hosted MAICSA original copy, independently corroborated by SC2026Appendix5; not MAICSA commentary.
- [8] Guidelines on Islamic Capital Market Products and Services, SC-GL/1-2022 (R2-2026)
Securities Commission Malaysia · Document date: 2026-03-30
30March2026 revision cover/list; fullChapters19–20printed38–39,Appendices5–6printed123–127 (2634–2781) independently read. Current orders and annualcertification/conditions/mutualexclusivity corroborated; NOT all163pages.