1 ZakatAccounting for Investment in Malaysia: A Case of Islamic Unit Trust Fund Mohd. ‘Adli Zahri 1 , Nurul Ilyana Muhd Adnan 2*1 , Norbahiyah Awang 3 , Fatin ‘Alia Zahri 4 , Norafzan Awang 5 and Nik Abdul Rahim Nik Abdul Ghani 6 1 Operation Division, BUJ Technology Enterprise Sdn. Bhd. Malaysia 2 Research Centre for Sharia, Faculty of Islamic Studies, UniversitiKebangsaan Malaysia, Malaysia 3 Faculty of Computer and Mathematical Sciences, UniversitiTeknologi Mara, Melaka, Malaysia 4 School of Social Sciences, Universiti Sains Malaysia, Penang, Malaysia 5 Faculty of Economic and Management, University College Bestari, Terengganu, Malaysia 6 Research Centre for Sharia, Faculty of Islamic Studies, UniversitiKebangsaan Malaysia, Malaysia ABSTRACT Zakat accounting means the process of identifying assets required for zakat, determining the conditions of assets, confirming the applicable zakat rates, and assessing the zakat on the related assets. The rate of payable zakat was determined at 2.5 per cent. However, it is argued if zakat were imposed on the shares' capital value. Is it fair and sensible if zakat based on physical asset is imposed solely on the income generated by the asset? Data were collected from documents analysis. The data then analyzed by content analysis.As a result, on 7th July 2011, Selangor government has issued the fatawa that zakat for unit trust would be based on ‘urudtijarah (trade goods). Meaning, zakat is imposed on the value of the shares and the income generated from the share. Based on content analysis of secondary data, the result shows that the zakat accounting for IUTF must be based on the intention of owning the shares in IUTF. Keywords: zakat accounting, investment, mutual fund, Islamic Unit Trust Fund, Malaysia 1. INTRODUCTION Investment means turning an asset into funds with the expectation that it will generatepositive income and/or preserving or increasing its value (Smart, Gitman & Joehnk, 2014). Investment can be made either in physical assets or in financial assets. Physical assets can be a tangible asset such as land, buildings, vehicles, gold and silver and meanwhile, financial assets are bonds, shares and trust funds. Investment can be divided into two types. Firstly, long-term investments with instruments on real assets such as land, buildings, office equipment, vehicles, investments in stocks and bonds. Secondly, short-term investments are investments in current assets 1 * Corresponding author Journal of Shanghai Jiaotong University Volume 17, Issue 5, April - 2021 ISSN: 1007-1172 Page No: 168