Homepage | About us | Advertise | Partners | Feedback Contacts | Русская версия Русский
Islamic-Finance.ru - Information and Analytics on Islamic Business and Finance in Russia Islamic-Finance.ru - Information and Analytics on Islamic Business and Finance in Russia Islamic-Finance.ru - Information and Analytics on Islamic Business and Finance in Russia

Latest News


GCC VAT a test for Islamic Finance- Fitch


Goldmoney adds Shariah-compliant methods to boost investment from Islamic markets


Path Solutions joins CIBAFI, the world renown General Council for Islamic Banks and Financial Institutions


"Kazakhstan Islamic Finance 2016: a new frontier for Islamic finance" country report


Azerbaijan looks to new Islamic bank as sector rules progress


Linar Yakupov received an award for his contribution to the development of Islamic finance industry in Russia


The 2nd International winter school of Islamic law and economics has started in Kazan


Russian financial experts are exploring options to launch Islamic Banking


Recent Comments


Islamic banking will be most relevant to SME sector: Zafar Sareshwala

Interview with director and head of Islamic Corporation for Development's (ICD) India operations.


Islamic Develop Bank calls for new Islamic microfinance structures

As the Shariah-compliant Islamic finance sector booms in the GCC region, the President of the Islamic Development Bank (IDB) Group, Dr. Ahmad Mohamed Ali, asked experts in the field to develop new Islamic microfinance structures.


Dubai Silicon Oasis Authority and Thomson Reuters Reveal Key Findings of Digital Islamic Economy Report 2015

Dubai Silicon Oasis Authority (DSOA) and Thomson Reuters, with support from the Dubai Islamic Economy Development Centre (DIEDC) released the 'Digital Islamic Economy Report' for 2015, in collaboration with DinarStandard.

GCC VAT a test for Islamic Finance- Fitch


Fitch Ratings-London-06 February 2017 The plan to introduce Value Added Tax (VAT) in Gulf Cooperation Council (GCC) member states could be a key test for the region's Islamic finance industry regarding tax parity between conventional and Islamic finance transactions, Fitch Ratings says. It could affect all the main pillars of the industry: Islamic banks, Sukuk, Takaful and sharia-compliant corporates and fund managers.
GCC VAT a test for Islamic Finance- Fitch
According to media reports last week, Saudi Arabia and Bahrain approved the implementation of VAT in the GCC; however, local implementation laws must still be agreed in each country. This paves the way for the introduction of an expected 5% VAT rate as early as the beginning of 2018, in a region with little history of taxation. Without tax neutrality or equality rules, the introduction of VAT would put Islamic finance transactions at a disadvantage to conventional transactions. In principal, Islamic finance activities should have a real economic purpose, involving services and/or asset-based or asset-backed transactions. For example, a murabaha sukuk, a simple, commonly used contract, can be summarised as the sale of an agreed asset or commodity at cost plus an agreed profit margin, which may then be financed in instalments. Banks also use murabaha as a means of providing liquidity to their customers, by buying the assets and then selling them to the customer at a mark-up, whilst giving the customer a period of credit in which to pay the purchase price and mark-up. The transaction often involves an arrangement for the bank to sell the assets into the market as agent for the customer and to account to the customer for the proceeds of that on-sale. A VAT charge adds to the instalment payments in a murabaha, while a conventional transaction would not have VAT for the sale of the asset added to the interest payments. It is worth noting that murabaha is only one form of Islamic finance. The tax impact could be even bigger for more complex transactions. Numerous countries with VAT have provided for some form of tax neutrality or equality for Islamic finance transactions, including Malaysia, Indonesia, Turkey and Pakistan. In the UK, the authorities apply a non-discriminatory approach to help ensure a level playing field, with comparable tax treatment of Islamic finance and conventional finance transactions. Our expectation is that the GCC authorities will make Islamic finance tax equality a priority. Given the aim of an aligned GCC VAT framework, we believe these rules would be broadly comparable across the region. Islamic finance represents a substantial proportion of the banking market across the GCC, particularly in Saudi Arabia which has a mature and developed Islamic finance industry, representing about two-thirds of total bank financing at end-1H16, and in Kuwait where it accounts for almost 40% of banking assets. The exact date and details of the framework and local implementation of VAT laws are not yet known. The complexity of some Islamic finance transactions could mean it will take some time. Moreover, if the planned tax treatment for Islamic finance activities is not made clear well in advance of implementation, then the uncertainty could reduce Islamic finance activity and attractiveness in the short term. Source: https://www.zawya.com/mena/en/story/GCC_VAT_a_test_for_Islamic_Finance_Fitch-ZAWYA20170206130038/

Latest News

Editor's Column

Follow ISLAMIC-FINANCE on Twitter


Malaysia's fast-growing Islamic finance sector benefits not only the Muslim world but also non-Muslim countries, said former Prime Minister Tun Abdullah Ahmad Badawi.

News in RSS format

Islamic-Finance.RU in RSS format
© IBFD Fund, 2009-2023. Developed by Linova-MEDIA. Хостинг от uCoz. Design by WebRT