Anticipated Tax Challenges In The Adoption of Islamic Finance in Uganda

Financing as per the Shariah is not loan or interest based, but it is instead asset based and provided through Sale based contracts (Murabaha, Salam and Istisna), Lease based contracts (Ijarah and its variations) and Sharing contracts (Mudarabah-profit share/loss borne by owner of capital, Musharakah-profit share/loss borne to extent of capital ownership, Muzara'a-revenue share). The above-mentioned contracts thus create the uniqueness in the taxation of Islamic financial products compared to conventional financing products.

I will simply highlight below some of the possible technical tax issues in regard to the commonest and most popular Islamic finance products that may need to be addressed by those planning to enact tax laws in Uganda either through specific tax legislation o...