Income Tax Act 1947 · 2020 Revised Edition · Part 7 · Ascertainment of Certain Income
34B. Islamic financing arrangements
Feedback & supportThis section applies to any prescribed Islamic financing arrangement entered into on or after 17 February 2006 between any person and a financial institution.
prescribed
“prescribed” means prescribed by rules or regulations made under this Act;
Subject to such exceptions, adaptations and modifications as may be prescribed, sections 10, 12, 13, 14, 15 and 45 and regulations made under section 43J apply in relation to any prescribed Islamic financing arrangement as if a reference in any of those provisions to interest accrued, derived, received or incurred in relation to any loan, deposit or mortgage were a reference to the effective return of the arrangement.
Where under a prescribed Islamic financing arrangement, an asset is sold by one party to the arrangement to the other party, the effective return of the arrangement must be excluded in determining for the purposes of this Act the consideration for the sale and purchase of the asset.
Subsection (3) does not affect the operation of any provision of this Act which provides that the consideration for a sale or purchase is to be taken for any purpose to be an amount other than the actual consideration.
For the purposes of this section, the Minister may make regulations —
to prescribe anything that is required or authorised to be prescribed under this section;
to provide for such transitional, supplementary and consequential matters as the Minister may consider necessary or expedient; and
generally to give effect to or for carrying out the purposes of this section.
In this section —
“effective return”, in relation to a prescribed Islamic financing arrangement, means the prescribed return in lieu of interest that has or is accrued, derived, received or incurred under the arrangement;
“financial institution” means —
any institution in Singapore that is licensed or approved by the Monetary Authority of Singapore, or exempted from such licensing or approval, under any written law administered by the Monetary Authority of Singapore; or
any institution outside Singapore that is licensed or approved, or exempted from such licensing or approval, under any written law administered by its financial supervisory authority for the carrying on of financial activities;
“Islamic financing arrangement” means a financing arrangement which is —
endorsed by any Shari’ah council or body, or by any committee formed for the purpose of providing guidance on compliance with Shari’ah law; and
permitted under any written law in Singapore or elsewhere.