Government Eyes Incentives for Islamic Finance
Indonesian government may offer tax incentives for Shariah bond issues and bank deposits to better compete with Malaysia, the world’s top Islamic finance market, the central bank official said on Tuesday. One sweetener being considered would help boost bank capital and another could provide a tax holiday for sukuk (Islamic bond) issues. The country has already removed double taxation on Islamic finance transactions to give the industry a level playing field with conventional banking, but new policy was needed.
To support Islamic banking and finance, it’s not enough just to have tax neutrality. We need also tax incentives like in Malaysia as islamic banking director at Bank Indonesia said on the sidelines of an Islamic-banking conference in Singapore. For investment to come into Indonesia, it is possible to give a kind of tax holiday. Islamic bank assets in Indonesia are just a fraction of total banking assets, while in Malaysia they are close to a fifth.
Indonesia’s Islamic bank assets were Rp 66 trillion ($7.2 billion) as of December, compared with Rp 2,534 trillion for the banking industry as a whole, central bank figures show. In Malaysia, Islamic banking assets totaled about $95 billion. Still, with the world’s biggest Muslim population, Islamic bankers say Indonesia is set for explosive growth. But first, authorities need to lay the right legal and regulatory framework.
Malaysia, the top sukuk market, accounted for about 40 percent of total global issuance last year of $19.1 billion. Incentives include a 20 percent stamp-duty exemption on Islamic securities through 2015. The Finance Ministry and central bank were studying tax incentives that could boost growth of Islamic finance. The study is expected to be finished by the end of the year.
Incoming search terms:
- government support for shariah bank in malaysia
- incentive financing by government in malaysia
- tax incentive for islamic banking in singapore
I’ve bookmarked this because I found it interesting. I would be very interested to hear more news on this. Thanks!
1Millions of Chinese, Indians, Vietnamese, Philippinos in this country – not one terrorist attack from these groups. I suppose you consider a gift that the few Muslims in this country perpetrated the largest attack on US soil in the history of the US. A gift of sharing their culture with us
2I think jovita hoeman too sarcastic and very narrow view.. look at 230 thousand iraqis died, almost 1 million vietnamese died, hundreds thousand palestinian killed, ..please talk about economic and finance dont say anything not connect..
3-,. I am really thankful to this topic because it really gives up to date information “**
4Great blog man, had very important content that I can relate to
5