Section 37January 26, 1990, Sec./Art. 37

Tax Exemption. - The Islamic Bank assets, profits distributions and all contracts, deeds documents and transactions related to the conduct of business of the Islamic Bank shall be exempted from all taxes under the National Internal Revenue Code to commence from the first taxable year, following its actual Islamic banking operation as certified by the Central Bank, to the extent as herein made allowable:

(1) One hundred per centum (100%) for the first five (5) years; and

(2) Seventy-five per centum (75%) for the sixth through the eight year: provided, however, that said exemption shall apply only to such taxes, fees, charges and assessments for which the Islamic Bank would otherwise be liable, and shall not apply to the taxes, fees, charges or assessments payable by persons or other entities doing business with the Islamic Bank.

An investment in Islamic banking business to the extent of actual participation in profit and loss sharing scheme, paid in cash or property, shall be granted an exemption from all taxes under the National Internal Revenue Code, except income tax: provided, that an investment tax allowance shall be permitted as a deduction from taxable income under such transactions to the extent that the Islamic Bank pays out zakat on the income of investors capital and surplus reserves for the duration of the joint investment period.