The role of tax system modernization in enhancing the adoption of takaful insurance institutions and windows in Algeria: An empirical study

Abstract

Purpose: This study examines the relationship between tax system modernization and Takaful adoption, focusing on how digital transformation and tax reforms influence Islamic finance. It explores how streamlined tax procedures, enhanced regulations, and ICT integration foster a conducive environment for Takaful. Importance/Value: This research highlights tax system modernization as a key driver of financial innovation in Islamic insurance. It demonstrates how tax reforms align with Islamic finance to enhance market stability, regulatory efficiency, and stakeholder trust. It also explores the broader impact of tax policy on sustainable economic growth. Methodology/Approach: This study employs an empirical analytical approach, using statistical modeling to assess the impact of tax modernization on Takaful adoption. Regression analysis and correlation tests were conducted on data from 108 Takaful employees out of a total population of 112 to quantify the relationship between tax policy enhancements and Takaful expansion. Findings: he study reveals a strong positive correlation between tax modernization and Takaful adoption. Simplified tax procedures, specialized fiscal structures, and digital technology boost participation. However, administrative and technological barriers may hinder full integration, highlighting the need for targeted policy interventions. Conclusion: Tax modernization catalyzes Islamic finance growth, particularly in expanding Takaful. A transparent, efficient, and technology-driven tax environment enhances financial inclusion and promotes broader acceptance of Islamic insurance. Recommendations: The study suggests simplifying tax procedures, investing in digital tax infrastructure, tax incentives for Takaful providers, and enhancing collaboration between regulators and Islamic financial institutions to support sector growth.