The Bureau of Internal Revenue Issues Tax Neutrality Ruling for Islamic Banks in the Philippines

According to the Revenue Regulations No. 17-2020, issued by the Philippines' Bureau of Internal Revenue (BIR) Commissioner, Caeser R Dulay on the 22nd of June 2020, Islamic banking transactions must have equality in its tax treatment when compared with conventional banking transactions, so that neither Islamic nor conventional banks are taxed more heavily or more lightly than the other.

According to the BIR, tax treatment for Islamic banking transactions will be based on their economic substance rather than legal form. The tax treatment for Islamic banking products and counterpart products from conventional banks will be the same, if they are considered “economically equivalent”, as per the...