Overview:
Islamic banking, also referred to as Islamic finance or Shariah-compliant finance, refers to financial activities that adhere to Shariah (Islamic law).
Parliament has passed the Income Tax (Amendment) (No.2) Bill, 2023, paving way for introduction of Islamic Banking in Uganda.
Islamic banking, also referred to as Islamic finance or Shariah-compliant finance, refers to financial activities that adhere to Shariah (Islamic law).
On Thursday, the Income Tax (Amendment) (No.2) Bill, 2023 was read for the third time and passed. The Bill, which seeks to provide for equivalent tax treatment of Islamic financial businesses, to conventional financial services or insurance businesses, was the final hurdle to the passing of the Bills that operationalize the Islamic Banking in Uganda.
In its sitting on Tuesday June 27, 2023 chaired by Speaker Anita Among, the House had passed a series of Bills, including amending Section 115B(2) of the Financial Institutions Act to remove the provision for a Shariah Advisory Council, which MPs said would be over-legislation, instead opting for Bank of Uganda to institutionally address operational issues relating to Islamic banking.
“We would like to thank Gov’t for considering this product. In our humble way, it has been long overdue. Islamic banking is not for Muslims; it is for the poorest of the poor in our community and it will help people irrespective of their religious background,”
Muwanga Kivumbi, Butambala County
The Value Added Tax Amendment Bill, which harmonises the reporting time for conventional banking practices and the Islamic banking was also passed by Members, bringing the country closer to the commencement of Islamic banking financial products by commercial banks.
Hon. Muwanga Kivumbi (Butambala County) thanked Government for considering laws on the operations of Islamic Banking and asked all stakeholders to give it a chance to thrive.
“We would like to thank Gov’t for considering this product. In our humble way, it has been long overdue. Islamic banking is not for Muslims; it is for the poorest of the poor in our community and it will help people irrespective of their religious background,” he said.
“We want to appeal to those powerful centres to give it a chance to thrive because it will address a key gap in access to affordable, cheap sources of financing businesses in this country,” he added.
Asuman Basalirwa (Bugiri Municipality) added: “Islamic banking is not intended to islamise this country. In any case, our Constitution is very clear; we are a secular country. I say so because of the fears and worries which we have. Islamic banking is for everybody.”