Terms of reference released for Islamic finance tax review
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Assistant Federal Treasurer Nick Sherry has announced the terms of reference for the review of the tax treatment of Islamic finance in Australia, which is to be undertaken by the Board of Taxation.
The terms of reference include a review of tax laws to identify any inhibitions to the provision of Islamic finance, banking and insurance products.
The review follows a recommendation by the Australian Financial Centre Forum. It will consider impediments in existing Commonwealth, state and territory tax laws to the development and provision of Islamic financial products, and any recommendations for change should ensure that Islamic financial products have equal tax treatment to conventional products.
Sherry said Islamic finance is a rapidly growing part of the global financial system, with the Islamic finance, banking and insurance market worth almost $1 trillion.
“Attracting more of these funds and investment will develop business and boost jobs in Australia,” he said
“My recent trip to the Middle East illustrated the vibrancy and dynamism of this sector and there is no reason why we shouldn't address national tax laws that may be inhibiting local growth.”
Sherry said the funds management sector had a lot to offer the wholesale Islamic finance sector and the review would also seek to address any issues that arise in this area.
The board’s final report is expected in June 2011.
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