Page 203 - Bank-Muamalat-Annual-Report-2021

ANNUAL REPORT 2021 201
SUSTAINABILITY STATEMENT OUR GOVERNANCE OUR NUMBERS OTHER INFORMATION

2. sIGNIfIcANT AccOuNTING POLIcIes (cONT’D.)

2.3 summary of significant accounting policies (cont’d.)
(p) Income recognition (cont’d.)
(ii) fee and other income recognition

Financing arrangement, management and participation fees, underwriting commissions, guarantee fees and
brokerage fees are recognised as income based on accrual on time apportionment method. Fees from
advisory and corporate finance activities are recognised at net of service taxes and discounts on completion
of each stage of the assignment.
Dividend income from securities is recognised when the Bank’s right to receive payment is established.

(q) Income and deferred taxes
Income tax for the year comprises current and deferred tax. 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 rates that have 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 profits 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 rates that are expected to apply in the period when the asset is realised or
the liability is settled, based on tax rates that have been enacted or substantively enacted at the financial position
date. Deferred tax is recognised as income or expense and included in the statements of profit or loss for the
period, except when it arises from a transaction which is recognised directly in equity, in which case the deferred
tax is also recognised 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 the amount of any excess of the acquirer’s
interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities over the cost
of the combination.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax
assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation
authority.

(r) Zakat
Zakat represents business zakat payable by the Group and the Bank to comply with the principles of Shariah and
as approved by the Shariah Committee.The Bank only pays zakat on its business and does not pay zakat on behalf
of its depositors or shareholders. Zakat provision is calculated based on capital growth model method.