The Bangko Sentral ng Pilipinas (BSP) has approved Circular No. 1139 on the Guidelines for Reporting Islamic Banking and Finance Transactions/Arrangements. This is a major leap forward for Islamic Finance in the Philippines as Islamic Banks (IBs) and Islamic banking units (IBUs) that are yet to be established now have regulatory guidance on the segregation, accounting, and reporting of Islamic finance transactions.
The circular was finalized a few months after the signing of a Memorandum of Understanding between the BSP and the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), the international standard-setting body for Shari’ah auditing, accounting, and governance.
Earlier, the BSP issued circulars on the Management of Liquidity Risk by IBs and IBUs; the Shari’ah Governance Framework for IBs and IBUs; and the Guidelines on the Establishment of IBs and IBUs, all pursuant to Republic Act No. 11439 or the Islamic Banking Act. The BSP has also issued a memorandum to address Frequently Asked Questions on Islamic Banking in the Philippines.
The Insurance Commission also issued Circular Letter No. 2022-04 on the Baseline Regulatory Framework for Takaful Undertakings earlier this year, while the Bureau of Internal Revenue (BIR) issued Revenue Regulations No. 17-2020 in 2020 to implement the tax neutrality provision of the Islamic Banking Act.