44 Pages Posted: 6 Dec 2013
Date Written: December 6, 2012
The purpose of this paper is to illustrate how and why Islamic finance transactions might create challenges for tax systems and to serve as an aid to considering what tax changes might be appropriate to enable Islamic finance to operate without suffering excessive taxation costs or double taxation.
Most tax systems were developed for conventional finance therefore in many cases; Islamic finance transactions suffer higher tax costs than their conventional equivalent. In the process of outlining the treatment of Islamic finance tax treatment in Europe and in Luxembourg specifically, we will introduce the reader to the basic principles of Islamic finance, the most common instruments and attach a glossary of Islamic finance terms and its synonyms in the English language.
Keywords: International Law, International Taxation, Islamic Finance Instruments
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