Ireland is hoping to be the home of Shari’a Islamic finance in Europe as it seeks to rebuild the financial services sector. Since 2011 and earler – the Irish Central Bank has authorised several Islamic institutions to operate in Dublin’s International Financial Services Centre.
Under Islamic Sharia law , making money from money by charging interest is deemed unfair and is not permitted. Sharia Law’s terms include strict limits on insurance, as well as other restrictions on financial services and trading.
On the mortgage market, institutions buy the house or the commercial real estate; the buyer then pays rent instead of interest.
The key Islamic finance principles include the following:
- the prohibition of activities based on speculation (maisir) or excessive uncertainty (gharar)
- the prohibition on investment in unethical businesses, products or services considered to be unethical.
- Islamic financial transactions are typically backed by or based on an identifiable and tangible underlying asset, and involve risk sharing between the investor
and the investee.
The value of funds administered in Dublin is worth €1,890bn, split evenly between Irish and non-domiciled funds.
Sukuk (Islamic bonds).
The Irish Stock Exchange has listed $34.68 billion worth of sukuk, ranking second internationally behind only Nasdaq Dubai.
Islamic equity funds are a growth industry and their assets are estimated to be at least €3.8 trillion dollars by 2020 .
Thr taxation of Islamic financial transactions can be complex .
There were measures enacted in the Finance Act 2010 to facilitate equivalent taxation treatment for Shariah-compliant transactions . This makes make Ireland an ideal jurisdiction to structure Shariah-compliant sustainable transactions.
The term Islamic Finance does not appear in tax legislation. For tax purposes, depending on the circumstances, transactions which are structured to be Shari’a
compliant may or may not be treated similarly to mainstream financial transactions, which are similar in substance.