Page 136 - Exim iar24_Ebook

EXIM BANK MALAYSIA
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NOTES TO THE FINANCIAL STATEMENTS

2. MATERIAL ACCOUNTING POLICY INFORMATION (cont’d)

2.4 Summary of material accounting policy information (cont’d)
(n) Revenue recognition (cont’d)

(v) Islamic income recognition (cont’d)
Takaful income

The source of Takaful income is derived from Takaful contributions. Income is recognised based on specific
percentage of the contribution amount from participants. The remaining amount is placed in Risk Fund which
is pooled for underwriting purposes.

Wakalah Fees
Wakalah fees represent fees charged by the shareholder’s fund to manage takaful certificates issued by the
general takaful fund under the principle of Wakalah and are recognised at over time, according to the period
of service provided.
(o) Income tax

Income tax on the profit or loss for the year comprises current and deferred taxes. Current tax is the expected
amount of income taxes payable in respect of the taxable profit for the year and is measured using the tax rate that
has been enacted at the reporting date.

Deferred tax is provided for, using the liability method. In principle, deferred tax liabilities are recognised for all
taxable temporary differences and deferred tax assets are recognised for all deductible temporary differences,
unused tax losses and unused tax credits to the extent that it is probable that taxable profit will be available
against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised.
Deferred tax is not recognised if the temporary difference arises from goodwill or negative goodwill or from the
initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the
transaction, affects neither accounting profit nor taxable profit.
Deferred tax is measured at the tax rate that is expected to apply in the year when the asset is realised or the
liability is settled, based on tax rate that has been enacted or substantively enacted at the balance sheet date.
Deferred tax is recognised as income or an expense and included in the statement of profit or loss for the year,
except when it arises from a transaction which is recognised directly in equity, in which case the deferred tax is
also charged or credited directly in equity, or when it arises from a business combination that is an acquisition, in
which case the deferred tax is included in the resulting goodwill or negative goodwill.
In determining the Group’s and the Bank’s tax charge for the year it involves estimation and judgement,
which includes an interpretation of local tax law and an assessment of whether the tax authority will accept the
position taken. The Group and the Bank provides for current tax liabilities at the best estimate based on all available
evidence and the amount that is expected to be paid to the tax authority where and outflow is probable.

The recoverability of the Group’s and the Bank’s deferred tax assets is based on management’s judgement of the
availability of future taxable profits against which the deferred tax will be utilised.