www.reuters.com - May 13 (Reuters) -
The government of the Australian state of New South Wales, home to the
country's financial capital Sydney, will send a group to Dubai this week
to discuss ways to develop the Islamic finance industry, officials said.
The delegation, led by New South Wales premier Barry
O'Farrell and including financial services professionals, will
explore regulatory and legal issues at a roundtable discussion
with the Dubai Export Development Corp on Tuesday. (source)
"The event will discuss business opportunities in New South
Wales, with particular attention given to Islamic finance," an
Australian government official, who declined to be named under
briefing rules, told Reuters. The delegation will also visit Abu
Dhabi and Lebanon.
With proximity to southeast Asia, where Islamic finance is growing rapidly, Australia
could play a role in the industry, officials believe. But efforts to
pass the necessary legislation at a federal level have been slow, so the
state government wants to get involved.
"The state government is very interested and trying to be
proactive in getting Middle East and local players together to
work out a deal," said Salim Farrar, senior lecturer at the
University of Sydney Law School.
Passing legislation governing Islamic finance will require
a series of politically charged debates, Farrar said.
But support is building in the business community, said
Talal Yassine, managing director at Sydney-based Crescent
Wealth. "Clearly there is going to be a push to get Islamic
finance up in Australia."
TAX
Australia faces a challenge shared by other jurisdictions
new to Islamic finance: taxation. Certain Islamic finance
structures, particularly sukuk or Islamic bonds, can attract
double or even triple tax duties because they require multiple
transfers of title of the underlying asset.
Obtaining tax amendments to alleviate this appears difficult
to push through the minority government of Australian Prime
Minister Julia Gillard.
"At the federal level developments are going nowhere fast,"
said Matthew Stutsel, national head of taxation for consultants
KPMG in Sydney.
The Australian Board of Taxation released a discussion paper
in October 2010 which prompted consultation meetings and
submissions. The final review was delivered to the government's
assistant treasurer last June. But no further action has been
taken, and the public release of the report "is a matter for the
Government to decide", a Board of Taxation statement said.
The government's attention has been focused on mining and
carbon tax initiatives, and an attempt to deliver a budget
surplus; extending tax breaks in other areas might not sit well
with voters. Elections are due in 2013.
But while federal-level discussions have been difficult, New
South Wales is interested in Islamic finance partly because of
the need to fund state projects such as upgrading railway
networks and refinancing public utilities. Islamic investors
operate large pools of investment funds in southeast Asia and
the Gulf.
Attracting investment into infrastructure and other sectors
is an important part of the state government's efforts to
position Sydney as a leading international financial centre, the
Australian official said.
Stutsel said work was being done within the state government
on infrastructure proposals. "The issue is largely going to be
withholding tax on sukuk, where we would be looking to leverage
a tax law change," he said.
Tax incentives might, for example, be offered for Islamic
investors in public-private partnerships. Typically, 10 to 15
percent of New South Wales infrastructure has been delivered
using PPP, according to a government report. Granting special
tax treatment for such projects cold avoid the need for a full
tax amendment.
(Editing by Andrew Torchia)
Source: http://www.reuters.com/article/2012/05/13/islamic-finance-australia-idUSL6E8F10H120120513 - May 13, 2012
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