By: Ainsley Brown
When an industry approaches being worth close to a trillion dollars it can no longer be considered a passing fancy or fad – Islamic banking and finance (IBF) is real and is as much a part of the global financial system as “conventional” finance.
It is this realization that has prompted Australia to conduct a review of its tax laws and their impact on IBF. The aim of the review, to be conducted by the Australian Board of Taxation, is to strategically position Australia to take advantage of the growing IBF market. As much was acknowledged by Australia’s Assistant Treasurer Senator Nick Sherry, “Islamic finance is a rapidly growing part of the global financial system and Australia is in an excellent position to capitalize on that growth, but we have to ensure our tax system doesn’t unnecessarily prevent that from happening.” Moreover, according to Sherry, “if Australia continues down the path of accommodating this type of finance it will serve Australia in terms of capital attraction, jobs and growth.”
The review is less about giving IBF special treatment under the law and more about finding and then removing barriers that unnecessarily and unfairly burden IBF. In ordering the Board of Taxation to conduct this review the Assistant Treasurer made it clear that “this is not about special treatment or concessions for Islamic finance or its providers, but about securing that our system doesn’t unfairly disadvantage or preclude such instruments and, in doing so, deprive Australia of capital, jobs and growth.”
The review will be among the first to be conducted by an Organization of Economic Co-operation and Development (OECD) country.
When will it be Canada’s turn?