Page 119 - EXIM-BANK-AR20

Section 06 Financial Statements
117

2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D.)
2.4 Summary of significant accounting policies (cont’d.)
(p) 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
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 and 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 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.
(q) Zakat
Zakat is payable by the Group and the Bank in compliance with the principle of Shariah and in line with National
Fatwa Committee regulations.
(i) Method applied
Zakat is calculated using the growth method which is based on the adjusted net asset of the Group and the
Bank, i.e. net asset excludes any items that do not meet the condition for zakat assets and liabilities.
(ii) Beneficiaries of zakat fund
The method of zakat distribution, as being practised by the Group and the Bank, is as follows:

• Zakat is paid to Pusat Pungutan Zakat (“PPZ”) based on certain percentage of the adjusted net asset of the
Bank and the Group;
• PPZ will determine a certain percentage of the zakat for the Bank’s own distribution; and
• The distribution of zakat will be allocated by the Bank to three (3) groups of people who are eligible to receive
zakat (asnaf) :

a. The destitute (fakir);
b. The poor (miskin); and
c. Those in the cause of Allah (fi sabilillah).