Islamic Banking

UK Boost for Islamic Finance

Stephen Harris, 18 March 2005

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Shariah compliant financial products were given a boost by two new measures announced in UK’s Budget. Firstly, corporation tax, income ta...

Shariah compliant financial products were given a boost by two new measures announced in UK’s Budget.

Firstly, corporation tax, income tax and capital gains tax rules will be changed to allow the Islamic equivalents of loans and deposit accounts - based on Murabaha and Mudaraba contracts - to receive the same tax treatment as equivalent banking products.

Secondly, the removal of multiple payments of Stamp Duty Land Tax will be made more accessible in Scotland and will cover a newly available Shariah compliant product, known as Diminishing Musharaka. This will help house-buyers who want to finance their purchase without taking an interest-bearing mortgage.

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