South Africa Plans To Amend Tax Law To Equalize Treatment of Shariah Compliant Mortgages

Bloomberg reports today that in South Africa, the government plans to introduce new tax rules next year to level the playing field for Islamic mortgages. South African law now exempts interest under $3206 (US) earned by those under 65 years of age from taxation. The new rules will give similar treatment to made from murabahah, mudarabah and diminishing musharaka arrangements-- transactions based on the exchange of assets structured to avoid the ban on interest imposed by Shariah law. South African banks plan to increase their offerings of Shariah-compliant mortgages once the new tax rules are in place. The government may also sell Islamic bonds if the tax law amendments are adopted.