The Public Ruling provides detailed guidance on the tax treatment of Asset-Backed Securitisation (ABS) transactions for originators, SPVs, and investors under Securities Commission Malaysia regulation.
The Inland Revenue Board of Malaysia has issued Public Ruling No. 3/2025 on 4 November 2025, clarifying the tax treatment of Asset-Backed Securitisation (ABS) transactions, including those related to sukuk structures.
The ruling offers comprehensive guidance for originators, special purpose vehicles (SPVs), and investors involved in ABS arrangements regulated by the Securities Commission Malaysia. The objective of this Public Ruling (PR) is to clarify the tax treatment in relation to the transaction of Asset-Backed Securitisation (ABS).
Tax treatment
This PR aims to explain the tax treatment under the Income Tax Regulations (Asset-Backed Securitisation) 2014 [P.U.(A) 170/2014] specifically for SPV established solely for the issuance of bonds or asset-backed sukuk, and related Originators. P.U.(A) 170/2014 applies to the Originators and SPVs in ABS transactions authorised by the SC starting from 1 January 2013.
P.U.(A) 170/2014 should be read in conjunction with the Capital Markets and Services Act 2007, including guidelines issued by the SC under that Act in relation to ABS. In essence, although both bonds and sukuk serve the same purpose of raising capital for companies, bonds and sukuk differ in terms of structure and compliance.
A bond is a conventional debt instrument with fixed interest payments. At the same time, a sukuk is structured to yield returns based on the performance of underlying assets that comply with Shariah principles. The tax treatment of sukuk, including profits and gains received and expenses incurred by the Originator and SPV, is the same as that of interest on bond issuances.
The income received and expenses incurred in sukuk transactions are considered similar to the tax treatment of interest in bond financing arrangements.
Tax treatment for originators
Revenue or gains from the disposal of trade receivables or stock in trade.
Gross income for the Originator from a business source can be determined when—
- a) any revenue from the disposal of any trade receivable or stock in trade of the Originator related to a securitisation transaction; or
- b) if the trade receivable or stock in trade related to that source has been recognised in the Originator’s account, any profits from the disposal of the trade receivable or stock in trade,
is/ deemed to have accrued during the period of the securitisation transaction and shall be counted as gross income of the Originator from that source in the basis period of a year of assessment (YA) related to the period of the securitisation transaction.
The gross income amount of the Originator in the basis period of a YA shall be determined in accordance with the following formula: A X C B, where,
- A is the number of days in the basis period of a YA that falls within the period of the securitisation transaction;
- B is the total number of days within the period of the securitisation transaction; and
- C is the total revenue or profit from the disposal of the trade receivable or stock in trade of the Originator.
Losses from disposal of trade receivable or stock in trade
If the trade receivable or stock in trade of the Originator related to a source consisting of a business have been recognized in the Originator’s accounts, any losses from the disposal of those trade receivable or stock in trade according to a securitisation transaction shall be deemed to have occurred during the period of the securitisation transaction and shall be allowed as a deduction in determining the Originator’s adjusted income from that source in the basis period of a YA related to the period of the securitisation transaction.
The amount of losses from the disposal of trade receivable or stock in trade, according to the securitisation transaction as an allowable deduction in the basis period of a YA shall be determined using the following formula: D X F E, where,
- D is the number of days in the basis period of a YA that falls within the period of the securitisation transaction;
- E is the total number of days in the period of the securitisation transaction; and
- F is the amount of the loss from the disposal of the trade receivable or stock in trade of the Originator.
