Difference between revisions of "Islamic Finance in the Philippines"
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To ensure [[conformity with Shari'ah principles]], the law requires IBs/IBUs to establish a [[Shari'ah Advisory Council]]. To promote a level playing field for lslamic banking, the law requires [[tax neutrality]] with their [[substantially equivalent conventional transactions]]. The Islamic Banking Act also mandates [[consumer education]] and [[capacity building]]. | To ensure [[conformity with Shari'ah principles]], the law requires IBs/IBUs to establish a [[Shari'ah Advisory Council]]. To promote a level playing field for lslamic banking, the law requires [[tax neutrality]] with their [[substantially equivalent conventional transactions]]. The Islamic Banking Act also mandates [[consumer education]] and [[capacity building]]. | ||
| − | The [[Bangko Sentral ng Pilipinas]] has issued various [[implementing circulars]] such as the [[Guidelines on the Establishment of IBs and IBUs]]; [[Shari'ah Governance Framework]]; [[Guidelines for Reporting Islamic Banking and Finance Transactions/Arrangements]]; and the [[Management of Liquidity Risk by IBs and IBUs]]. The BSP has entered into a Memorandum of Agreement with the [[Accounting and Auditing Organization for Islamic Financial Institutions (AOOIFI)]] to cover the possible adoption of relevant [[AAOIFI standards]] by the local Islamic banking and finance industry, and cooperation in the areas of capacity building and technical assistance. The [[Bureau of Internal Revenue]] has also issued [[Revenue Regulations]] and a [[Revenue Memorandum Circular]] to implement the Tax Neutrality provision in the Islamic Banking Act. | + | ===Implementation of the Islamic Banking Act=== |
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| + | ====Bangko Sentral ng Pilipinas==== | ||
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| + | The [[Bangko Sentral ng Pilipinas]] has issued various [[implementing circulars]] such as the [[Guidelines on the Establishment of IBs and IBUs]]; [[Shari'ah Governance Framework]]; [[Guidelines for Reporting Islamic Banking and Finance Transactions/Arrangements]]; and the [[Management of Liquidity Risk by IBs and IBUs]]. The BSP has entered into a Memorandum of Agreement with the [[Accounting and Auditing Organization for Islamic Financial Institutions (AOOIFI)]] to cover the possible adoption of relevant [[AAOIFI standards]] by the local Islamic banking and finance industry, and cooperation in the areas of capacity building and technical assistance. | ||
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| + | ====Bureau of Internal Revenue==== | ||
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| + | The [[Bureau of Internal Revenue]] has also issued [[Revenue Regulations]] and a [[Revenue Memorandum Circular]] to implement the Tax Neutrality provision in the Islamic Banking Act. | ||
==The Bangsamoro Organic Law== | ==The Bangsamoro Organic Law== | ||
Revision as of 20:56, 4 February 2023
Islamic finance in the Philippines can be traced to the establishment of the Al-Amanah Islamic Investment Bank in 1973, pursuant to Presidential Decree No. 264. In 2019, Republic Act No. 11439 or the “Islamic Banking Act” was signed into law, paving the way for the establishment of Islamic banks (IBs) and separate Islamic banking units (IBUs) within conventional banks in the Philippines.
The Islamic Banking Act
To ensure conformity with Shari'ah principles, the law requires IBs/IBUs to establish a Shari'ah Advisory Council. To promote a level playing field for lslamic banking, the law requires tax neutrality with their substantially equivalent conventional transactions. The Islamic Banking Act also mandates consumer education and capacity building.
Implementation of the Islamic Banking Act
Bangko Sentral ng Pilipinas
The Bangko Sentral ng Pilipinas has issued various implementing circulars such as the Guidelines on the Establishment of IBs and IBUs; Shari'ah Governance Framework; Guidelines for Reporting Islamic Banking and Finance Transactions/Arrangements; and the Management of Liquidity Risk by IBs and IBUs. The BSP has entered into a Memorandum of Agreement with the Accounting and Auditing Organization for Islamic Financial Institutions (AOOIFI) to cover the possible adoption of relevant AAOIFI standards by the local Islamic banking and finance industry, and cooperation in the areas of capacity building and technical assistance.
Bureau of Internal Revenue
The Bureau of Internal Revenue has also issued Revenue Regulations and a Revenue Memorandum Circular to implement the Tax Neutrality provision in the Islamic Banking Act.
The Bangsamoro Organic Law
Republic Act No. 11054 or the “Bangsamoro Organic Law” established the Bangsamoro Autonomous Region in Muslim Mindanao (BARMM). The law also has provisions on the promotion and development of Islamic banking and finance. Pursuant to this law, the Shari’ah Supervisory Board in the BARMM was established. The Bangsamoro Government is currently finalizing a roadmap for Islamic finance in the BARMM and the Philippines in general. It is also working on tax neutrality between Islamic finance transactions and their conventional counterparts in the development of the Bangsamoro revenue code.