The fiscal aspects of Islamic finance in an international context

Les aspects fiscaux de la finance islamique dans un contexte international

Jean-Raphael Pellas () and Aldo Lévy ()
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Jean-Raphael Pellas: IEDP - Institut d'Etudes de Droit Public - Université Paris-Saclay
Aldo Lévy: LIRSA - Laboratoire interdisciplinaire de recherche en sciences de l'action - CNAM - Conservatoire National des Arts et Métiers [CNAM]

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Abstract: The assimilation of Islamic finance instruments to financial categories under French law allows their recognition. Thus, sukuk are deemed to be sui generis financial securities because they provide their holders with a right of ownership over the underlying asset. This right was transmitted to them using the contractual structuring of the sukuk which destroys the barrier between its juxtaposed constituent contracts. Remuneration paid to holders of investment sukuks or indexed debt securities and loans is treated for tax purposes as interest under common law conditions. In addition, the ijara constitutes a leasing transaction (art. L.313-7 of the monetary and financial code) or rental with option to purchase, the tax conditions are then those applicable to these operations with two administrative tolerances: The purchase option for the benefit of the customer appears in a contract separate from the rental contract without hindering the qualification of leasing; It is possible for the Ijara to benefit from the registration fee based on the price of the option (and not on the market value of the building, which is much higher). In Islamic finance, if the lessor is non- resident, it is necessary to verify in the State of the lessee that the property made available does not constitute a permanent establishment of the lessor. International tax conventions should better regulate the tax consequences of these instruments.

Date: 2013-06-06
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Published in Crises et opportunités, 3ème congrès transatlantique de comptabilité, audit et gestion, Université de Lyon 2, Jun 2013, Lyon, France

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