This conceptual paper addresses the fiscal policy of Islamic practice which includes taxes, Zakat and Waqf in Malaysia. Hence, the purpose of this article is to provide an overview on the most suitable modification of fiscal policies on taxes, Zakat and Waqf in order to enhance Malaysia’s economy. Besides, it also provides an overview on previous tax policy that has been changed from sales and services (SST) to good and services tax (GST). Hence, it then proposes a significant framework to modify the Zakat and Waqf system in Malaysia based on the faith- based model that relies on the divine and fair rules of standard operation.