Abstract
The awareness of and access to Islamic financing has increased significantly over the last few years in South Africa, and globally. Due to this increase, the need for tax legislation regarding Islamic financing was essential. Therefore, such tax legislation was introduced in most countries across the world, including South Africa and Malaysia. This paper provides an overview of the Islamic financial products that are available in South Africa and Malaysia, and the tax consequences for these products. Furthermore, a comparative analysis of the tax treatment in South Africa and Malaysia is presented. A qualitative research approach is followed. The tax implications of Islamic financing in South Africa and in Malaysia were developed to achieve tax neutrality for taxpayers utilising Islamic financing as opposed to taxpayers utilising conventional financing. The treatment in both states ensures that those Islamic financed taxpayers are not disadvantaged in any way. However, Malaysia offers many tax incentives to Islamic financed users, while South Africa does not. These incentives benefit the taxpayers using Islamic finance products in Malaysia and therefore attract more users and foreign investors.