MoAfrikaBorwa🇿🇦

WHY DID SOUTH AFRICA CHANGE ITS TAX LAWS TO ACCOMMODATE SHARIA-COMPLIANT BANKING? I wonder if the majority of South Africans know that if you lobby hard enough, have a finance minister like Pravin Gordhan by your side, your religious laws can be accommodated in the country's tax laws and SARS will understand? In 2010, Parliament introduced amendments to South Africa’s tax legislation to accommodate certain Islamic financial arrangements. These included section 24JA of the Income Tax Act, alongside related amendments affecting transfer duty and other taxes. The arrangements are structured to comply with Islamic financial principles, to make them #halaal, including restrictions on interest. The difficulty for the tax system was that some of these transactions involved legal steps that differed from conventional loans and mortgages, even where their economic purpose was comparable. The 2010 amendments introduced rules intended to treat qualifying Islamic financing arrangements more comparably to conventional financial products for tax purposes. Basically, if they had been treated according to existing laws, @SARS would have made more money in collected taxes but, the government’s argument was tax neutrality: comparable economic transactions should not face different tax outcomes merely because their legal structures differ. So, basically they said no thank you to the extra tax revenue whilst the rest of us are milked dry 😒 So, if conventional banking already exists in South Africa, why should the state adjust its tax legislation for people who voluntarily choose a different financial system? If a customer chooses Sharia-compliant financing because they do not want to participate in interest-based lending, why shouldn’t that customer accept the financial and legal costs associated with that choice? Why shouldn't @SARS be allowed to collect extra revenue if there is any? Why did Parliament choose to address this problem through legislation explicitly identifying Sharia-compliant arrangements, rather than relying entirely on general, religion-neutral rules for economically equivalent transactions? Let's remember that South Africa is a secular constitutional democracy. Religious freedom protects individuals’ ability to practise their faith, but it does not automatically entitle every religious doctrine to its own legal or fiscal framework. So, why is this the case with Islam? Are they just better at advocating for their causes or is there something else we must consider?