With regard to Islamic investments, it's proposed that the profit share earned by the investor will benefit from the tax exemptions currently provided for interest earned. The exemption is currently between R22 300 and R32 000 per annum. Further proposed amendments apply to Diminishing Musharaka, which is ideally suited to home mortgages and other such long term projects. The tax amendments propose that in Shariah financing, there should no longer be double transfer duty with the house first being transferred to the bank and then to the buyer. Also the rental portion of the payments to the bank in a Diminishing Musharaka structure would not attract additional indirect taxes, as is currently the case.
While these proposed amendments may sound complicated the critical elements for Muslims in South Africa are the real commitment of National Treasury to ensure that South African Muslims enjoy the same benefits from the formal banking sector that are currently enjoyed by other South Africans and that South Africa is positioned to become a key financial hub on the African continent, where Islam is the majority religion. Other benefits include increased ease of product structuring for Islamic banks so that the range of financial products offered to Muslims, will deliver at least as much choice as those offered by conventional banking. As a member of the Banking Association committee on Islamic Banking, the National Treasury has broken new ground for the work being done on addressing the needs of Islamic financial institutions and their customers in South Africa. The proposed amendments will ensure that South Africa becomes an Islamic finance product development incubator for the rest of the continent"