KPMG helps form Islamic Financial Services Industry Focus Group

The contemporary Islamic finance industry globally is now in its fourth decade and, during this period the industry has developed extremely rapidly. In the past few years, overall market growth has been estimated at between 15-20 per cent annually, although individual Islamic banks have reported even faster growth. at present the sector is estimated to have assets under management of an estimated US$500bn globally.

The initiative was aimed at the formation of industry focus groups to collectively address various issues faced by the Islamic Financial Services industry in Sri Lanka. Reyaz Mihular - Partner/ Head of Advisory of the firm moderated the forum.

Suresh Perera - KPMG Director of Tax said that the issues faced by Islamic financial services are not unique to Sri Lanka. The development of Islamic Financial Hubs in UK, Singapore and Malaysia has been facilitated due to the fiscal legislative changes introduced in these countries.

The Finance Acts of 2003, 2005, 2006 and 2007 enacted in UK have helped to create a level playing field for Islamic Financial Instruments such as Murabaha, Ijara, Mudaraba, Musharaka, Diminishing Musharaka and Sukuks. The Malaysian Government in seeking to promote the country as an International Islamic Financial Centre (IIFC) has granted many tax exemptions and incentives.

Singapore which is competing with Malaysia to attract the high liquidity in Middle East to their economy has also introduced many changes to their tax and legal regimes to create a level playing field for the Islamic Financial Instruments and incentives to attract funds from the investors seeking Shari'ah Compliant financial Instruments.