circumstances, supply and demand for funds, inflation, domestic and national savings and
the return the bank wishes for its depositors as well for itself.
Bank Muamalat has a single tax charge on murabaha Albaraka Bank has a double tax fee, at the front and back end of the
transaction in murabaha.
B. Recommendations
It is obvious that the Islamic banks and Islamic window banks in South Africa are currently operating under constraints from the central bank and tax
legislations. Despite this there is a strong influence from the role players in Islamic financing to revolutionise Islamic banking in South Africa.
1. Theoratical recommendation
Banking and Tax analysts are commenting in local and international media that the new tax laws in South Africa will spur investment from foreign investors
and will level the playing field between Islamic banks and conventional banks. Some are even saying that the proposed tax laws could increase the tax base and
bolster the country‟s gross domestic product GDP. South Africa joins Australia, Hong Kong, the United Kingdom and a growing
number of other non-Muslim countries developing their Islamic finance sector by
changing regulations to attract investors who can only put their money in Shariah compliant assets.
According to some analyst “Islamic finance is likely to become a permanent feature of So
uth African economic landscape”.
2. Practical recommendations
With all the positive hype and lobbying to recognize Islamic banking globally as the only solution to the world economic crises, the question to be asked is that
are these Islamic financial institutions only presenting theoretical alternatives to the interest based banking system and whether the practical implementation of the
actual transactions are adhered to in their day-to-day activities. By merely having “Shariah Compliant Certificates” does not render the
transactions permissible. The Islamic transaction does not come into existence by merely replacing the word of “interest” by the word of “profit” or “mark-up”.
Actually all the modes of financing have been allowed by Shariah scholars with some conditions. In fact it is the observance of the conditions which can draw a s
clear line of distinction between an interest bearing loan and a transaction of murabaha etc If these conditions are neglected, the transaction becomes invalid
according to Shariah. Provided that an institution offering Islamic finance has a competent and reputable internal Shariah supervisory that adheres to
internationally accepted standards of Shariah compliance, it is difficult to conceive that an approved Islamic product would necessary be different. It is for
this reason that Islamic financial institutions have had to approach regulatory authorities like AAOIFI in order to obtain specific dispensations that relate to
them.
More focus should be given on practical implementation and auditing the Shariah compliance of all finance transactions to ensure that all the relaxed
rules are adhered to stringently. As for now the Islamic modes of financing in vogue is purely based on
the „‟lesser of the two evils”.
3. University
