Banking experts have differed on article no.23 of sukuk bill currently discussed at the Shura Council (upper house of parliament) which stipulates the exemption of non-governmental sukuk transactions, related real estate transactions, registration of assets and benefits, transactions output and dividends from all charges and taxes.
Some see exempting sukuk from charges and taxes will benefit the holders of sukuk at the expense of other people investing in the Egyptian Exchange (EGX), treasury bills and bonds and other financing instruments. Other experts affirm that sukuk are financing instruments that are based on profit and loss sharing, without having a fixed return unlike other instruments; therefore, exempting sukuk from charges and taxes will encourage investors to invest in the instrument.
Ahmed El-Ghandour, head of investment sector at United Bank, stated that exempting sukuk from charges and taxes will attract investors to the high-risk sukuk which depends on the Islamic principle of “Al-ghurm bil ghunm” (earning profit by risk-sharing) as well as the non-fixed return, contrary to other instruments such as treasury bills and bonds which have pre-determined returns and low risks.
As sukuk will be tax-exempt, the regulators shall levy no more new taxes on EGX transactions so as to insure that funds invested in the bourse will not all go for sukuk, he affirmed, noting that the taxes imposed on EGX are 10% only levied on acquisition deals.
On the other hand, the banking expert Bassant Fahmy opposes this opinion considering exempting sukuk from charges and taxes as bias to Islamic financing instruments.
“Claiming that sukuk are higher-risk investment than other instruments is completely groundless as each instrument is exposed to the risks of the market,” she noted.
“Other financing instrument shall be exempted like sukuk so as to insure investors would not flee from these instruments,” she affirmed.