KL Tax Incentives for Asset-backed Securities

In its 2003 budget the Malaysian government has authorized a tax deduction on expenses incurred while structuring, documenting, and issuing Islamic Private Debt Securities (IPDS), in hopes of attracting more Middle Eastern investment. The deductions are intended to benefit issuers who utilize ijara , mudaraba , and musharaka contracts, asset-backed as opposed to debt-backed securities. Murabaha-backed securities have increased dramatically in recent years in Malaysia. Desire for Islamic unit trusts and debt securities continues to grow in Malaysia, in part due to government awareness programs; growing demand has sparked more corporations to utilize IPDS. The Malaysian government has begun to issue global sukuks to attract foreign investment. The Securities Commission has produced sets of Practice Notes relating to shari`a guidelines and the registration of shari`a committee members.