Malaysia proposes an issuance-cost deduction for Sukuk Prisma

A proposed financing-cost deduction

Budget 2027 Appendix 15 would cover Sukuk Prisma approved or authorised by the Securities Commission Malaysia, or lodged with it. Prisma is intended to channel capital towards sustainable projects, including climate adaptation, water and food security, biodiversity resilience and the blue economy. The proposal concerns issuance costs: it should not be read as an exemption for the issuer’s profits or investors’ returns.^[1][3]

The existing SRI comparator

The Income Tax (Sustainable and Responsible Investment Sukuk) Rules 2025, P.U.(A) 267/2025, operate under Income Tax Act 1967 paragraphs 154(1)(b) and 33(1)(d). Rules 1–2 allow qualifying Malaysian-resident companies, including resident Labuan companies, to deduct issuance or offering expenditure for years of assessment 2024–2027. The instrument must meet SC approval or lodgement and guideline requirements, with 90% of proceeds used solely for the specified SRI projects.^[2][4]

Current rule 2 deducts exempt grants financing external-review expenditure from the allowable amount and prevents another deduction under these rules where issuance expenditure has already been claimed under other section 154 rules for that year. These are current SRI restrictions, not verified Prisma conditions.^[2]

The current SC SRI framework also requires project evaluation, proceeds tracking and annual reporting to sukuk holders. It supplies the regulatory context for the existing tax rule; it does not establish the future Prisma tax criteria. SC’s September explanation described the Prisma framework as work in progress, before the Budget’s new tax proposal.^[5][6]

Practical significance for financing groups

For groups considering Malaysian sustainable-finance issuances, the proposal could reduce the after-tax cost of qualifying issuances over a four-year assessment window. Appendix 15 expressly retains SRI relief through 2027 but does not specify Prisma’s final company definitions, proceeds threshold or grant-offset formula. Financing models should therefore separate existing SRI relief from the proposed deduction and verify the implementing provisions before claiming Prisma relief.^[1][2][3]