Article 67 - Taxation of Islamic Financial Institutions
(1) Where any of the conditions of Article 67(3) are met an
Islamic Financial Institution may make a claim, in respect of any Accounting Period, for a tax adjustment.
(2) In this Article a "tax adjustment" means a decrease in the
Chargeable Profits, or an increase in the tax loss, of an Islamic Financial Institution, and such tax adjustment can create a tax loss.
(3) The conditions required for a tax adjustment are—
(a) the profit declared in accounts prepared under standards issued by the Auditing and Accounting Organisation for Islamic Financial Institutions (AAOIFI) is materially higher, or in the case of a loss the loss is lower, than would have been declared under
Chargeable Profit, or tax loss, in respect of an Islamic Finance Transaction, or series of transactions, is materially higher or, in the case of a tax loss, lower, than would have arisen from an equivalent transaction, or series of transactions, structured as a Conventional Finance Transaction.
(4) For the purposes of Article 67(3) "materially" means more than 5%.
(5) The amount of a tax adjustment under this Article shall be such as is required to adjust the
Chargeable Profits or, as the case may be, the tax loss for the Accounting Period of claim to the figure that would have arisen had the profit or loss been declared under IFRS or the transaction, or series of transactions, had been structured as a Conventional Finance Transaction.
(6) Where the whole or part of a tax adjustment arises from the timing of the recognition of income or expenditure, the
Chargeable Profits or tax losses of subsequent Accounting Periods shall be adjusted to take into account the reversal of any such timing difference.
|Amended (as from 18th June 2014)|