Terms of reference for Islamic finance tax review - update

Islamic finance man of the moment, Assistant Federal Treasurer Nick Sherry, has now announced the terms of reference for the review of the tax treatment of Islamic financial instruments in Oz. The review itself will be undertaken by the Board of Taxation.

The terms will include a review of the relevant tax laws to identify any impediments to the provision of Islamic finance, banking and Takaful products on a 'level playing field' to their conventional counterparts. The review follows a recommendation by the Australian Financial Centre Forum and will review impediments in existing state and federal tax laws to the growth of Islamic finance.

Senator Sherry acknowledged that Islamic finance was growing rapidly across the globe and was fast approaching the point where total Shari'ah compliant assets under management were around US$1,000 billion. "Attracting more of these funds and investment will develop business and boost jobs in Australia," according to the Assistant Treasurer. "My recent trip to the Middle East illustrated the vibrancy and dynamism of this sector and there is no reason why we should not address national tax laws that may be inhibiting local growth."

Watch this space.