Article 76 bis 5 addresses the treatment of 'late payment' amounts in Islamic finance. Since Sharia prohibits conventional interest on late payments, institutions often charge a penalty that must be donated to charity. This Article allows such donations to be fully deducted from taxable income, provided they are made to approved entities (per Article 55). Crucially, these specific donations are not restricted by the standard 5% cap on total donations. This recognizes the unique regulatory and religious obligations of Islamic financial institutions, ensuring their mandatory charitable contributions do not result in an unfair tax burden.
Part 3 - Chargeability to Tax
Chapter 2 bis - Provisions Concerning the Determination of Taxable Income for Parties in Financial Islamic Transactions
Section 2 - Rules Pertaining to Certain Types of Income and Expenses
Article 76 bis 5
[GTL Notes: Deductibility of Delay-Linked Donation Payments]
When determining the taxable income in compliance with the provisions of this chapter - donations that a person is committed to pay must be deducted its performance in accordance with applicable laws and regulations in consideration for what he received from additional amounts in return for a trader delay in the payment of dues; provided that such donations are made to any of the categories determined in accordance with Article 55 (item 10) of this law; and without being restricted by the maximum discount provided for thereof.
Continue Reading
Access Full Content
You're viewing a preview of this document. Please log in to unlock the complete content, annotations, and research tools.