Islamic Fund Management
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Table 4.5: Tax Incentives for the Malaysian Fund Management Industry
Fund Management Company Collective Investment Scheme
Licensed foreign fund management company:
 A 10% tax on chargeable income from the
provision of fund management services to
foreign investors.
Licensed fund management company:
 Tax exemption on statutory income derived
from the business of providing fund
management services to:
1. Local and foreign investors in Malaysia.
2. Business trusts and REITs in Malaysia.
The fund must be managed in accordance with
Shariah principles and certified by the SC (until
YA 2020)
 Tax exemption on management fee income from
managing conventional and Shariah-compliant
SRI funds, for YA 2018 to 2020. The SRI funds
must be approved by the SC.
Unit Trust:
 Tax exemption on interest income from any
licensed bank/financial institution/development
financial institution. In the case of a wholesale
fund which is a money market fund, the
exemption will only apply if the fund complies
with the criteria set out in the relevant
guidelines of the SC.
 Tax exemption on gains following the realisation
of investments.
 Tax exemption of interest or discount.
PRS:
 The GOM will match RM1,000 per qualified
person (aged between 20 and 30) if the
individual made PRS contributions every year
from YA 2014 to YA 2018.
 Tax relief of up to RM3,000 for PRS and
deferred annuity scheme premium (YA 2012 to
YA 2021).
REIT:
 Tax exemption on all income if at least 90% of
total income is distributed and the REIT is listed
on Bursa Malaysia.
 Exemption of stamp duty on instruments of
transfer/deeds of assignment relating to the
purchase of real property, and instruments of
transfer of real property to REIT.
 Exemption of real property gains tax on the
disposal of real property to REIT.
 Final withholding tax of 10% on income
distribution received by non-corporates or
foreign institutional investors from a REIT which
has been exempted from tax (until YA 2019).
 Final withholding tax of 24% on income
distribution received by non-resident companies
from a REIT which has been exempted from tax.
 Special single deduction for consultancy, legal
and valuation service fees incurred in the
establishment of a REIT.
 No balancing charge on the disposal of an
industrial building by a company to a REIT. The
REIT is eligible to claim the balance of any
unclaimed industrial building allowance of the
disposer if the disposer company owns 50% or
more of the units in the REIT.
 An SPV established by a REIT is treated as a tax-
transparent entity, where its income is deemed
received by that REIT for income tax purposes.
Closed-end fund:
 Tax exemption on gains following the realisation
of investments.
 Tax exemption on interest or discount.
Source: 2018 Malaysian Budget announced on 27 October 2017