Parliament is this afternoon expected to pass amendments to the Tax Amendment Bill, 2023 to pave the way for the introduction of Islamic Banking in Uganda.
According to the Order Paper, this is among the matters that are top on the list of today’s business.
If passed into law, Uganda will join other African countries that have adopted Islamic banking but are non-Islamic states, including South Africa, Senegal, Botswana, Zambia, Eritrea, Mozambique, Kenya, Tanzania, and Rwanda.
However, the Uganda Law Society has called for careful consideration and further deliberation before enacting laws related to Islamic Banking in Uganda.
Appearing before Parliament’s finance committee yesterday, Cephas Birungyi, a partner and team Leader at Birungyi, Barata & Associates and a representative of the Uganda Law Society, emphasized the need for a cautious approach in implementing Islamic Banking.
Birungyi highlighted potential risks and the necessity for comprehensive understanding and preparation before introducing new tax bills.
He expressed his belief that implementing the legislation without proper software development would be premature and pose implementation challenges.
What is Islamic banking?
Islamic banking is guided by Shari’ah principles as laid down in Islamic commercial law. While Shari’ah is a legal framework within which the affairs of a Muslim’s life are governed, Islamic banking applies only a portion of Shari’ah which relates to commercial transactions.
Like other religions, Islam prohibits Usury/interest which is a backbone of conventional banking system. In addition to interest, Islam prohibits other unethical business conducts such as; excessive uncertainty, gambling, speculation and materialism.
