In her keynote address to the recent IFN 2011 Issuers & Investors Asia Forum in Kuala Lumpur, Nik Ramlah Mahmood, the Managing Director of the Securities Commission Malaysia (SCM), said that, for the Islamic capital market to make further progress, more jurisdictions would need to put uniform tax frameworks into place.
She disclosed that, as at end-2010, the size of Malaysia’s Islamic capital market stood at MYR1.05 trillion (USD336bn), or 52% of the size of the overall Malaysian capital market, as compared to only MYR294bn as at end-2000. At the global level, the value of Islamic financial assets is estimated to expand to USD4 trillion over the next few years, from the current level of USD1.2 trillion.
The SCM sees that the next phase of growth for the Islamic capital market will be characterized primarily by greater internationalization and that growth in the number of jurisdictions and industry participants that embrace Islamic finance will be a major factor in stimulating more cross-border transactions and activities.
In that case, in addition to a further development of standards and guidelines by international organizations, such as the Islamic Financial Services Board and the Accounting and Auditing Organization for Islamic Financial Institutions, and a greater harmonization of Shariah rulings and interpretations, Mahmood believes that a uniform tax framework will also be necessary to provide a more common platform for industry players to operate across jurisdictions.
“There is also a need to address the elements of uncertainty and disparity in the legal, regulatory and tax frameworks for Islamic capital market transactions, particularly in cross-border situations,” she confirmed. “Malaysia has established relevant frameworks that put Islamic financial products effectively on the same playing field as their conventional counterparts. However, for Islamic capital market to progress further internationally, more jurisdictions would need to move in a similar direction.”A comprehensive report in our Intelligence Report series giving a country-by-country analysis of offshore investment funds, stock exchanges and trusts, with an analysis of the US QI regime, is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report9.asp
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