The Uganda Bankers Association (UBA) has urged Bank of Uganda to review the existing tax laws so as to promote Islamic Banking in Uganda.
According to UBA, the current taxes on Islamic finance products are unfair if compared to those of conventional finance and investment products.
“Review tax laws to treat Islamic Banking fairly like other products,” UBA says in a report.
UBA notes that Bank of Uganda should also review the constitution of the Sharia Advisory Council for Islamic Banking to be composed of members that are knowledgeable and experienced in Islamic or Sharia law, with a mandate that does not overlap that of the Shariah Advisory Board.
“An effective Shariah governance framework requires involvement of the [Shariah Council] as the key player, government as the regulator, Islamic financial institutions as implementers and other persons relevant to the business such as auditors, accountants, lawyers,” the report reads in part.
The Muslim community led by Uganda Muslim Supreme Council and the Kibuli-based factions have previously said there was no excuse as to why Bank of Uganda would fail to implement Islamic Banking, noting that Uganda has enough Muslim scholars with the requisite skills to help in the implementation of Islamic Banking.
Ms Charity Mugumya, the Bank of Uganda director communications, acknowledges that whereas there was need to amend the existing tax code, this is the responsibility of Ministry of Finance.
“There is need to amend the existing tax code for equitable tax treatment of Islamic financial transactions [but] this is … outside the control or influence of BoU,” she said.