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  • Part 11: Part 11: Islamic Finance

    • Article 66 - Policy Statement on Islamic Finance

      The QFC supports the development of Islamic financial services within Qatar through a tax regime which ensures that the tax treatment of Islamic Financial Institutions and Islamic Finance Transactions is no more burdensome than that of conventional finance alternatives.

      Amended (as from 18th June 2014)

    • Article 67 - Taxation of Islamic Financial Institutions

      (1) Where any of the conditions of Article 67(3) are met an Islamic Financial Institution may make a claim, in respect of any Accounting Period, for a tax adjustment.
      (2) In this Article a "tax adjustment" means a decrease in the Chargeable Profits, or an increase in the tax loss, of an Islamic Financial Institution, and such tax adjustment can create a tax loss.
      (3) The conditions required for a tax adjustment are—
      (a) the profit declared in accounts prepared under standards issued by the Auditing and Accounting Organisation for Islamic Financial Institutions (AAOIFI) is materially higher, or in the case of a loss the loss is lower, than would have been declared under IFRS; or
      (b) the Chargeable Profit, or tax loss, in respect of an Islamic Finance Transaction, or series of transactions, is materially higher or, in the case of a tax loss, lower, than would have arisen from an equivalent transaction, or series of transactions, structured as a Conventional Finance Transaction.
      (4) For the purposes of Article 67(3) "materially" means more than 5%.
      (5) The amount of a tax adjustment under this Article shall be such as is required to adjust the Chargeable Profits or, as the case may be, the tax loss for the Accounting Period of claim to the figure that would have arisen had the profit or loss been declared under IFRS or the transaction, or series of transactions, had been structured as a Conventional Finance Transaction.
      (6) Where the whole or part of a tax adjustment arises from the timing of the recognition of income or expenditure, the Chargeable Profits or tax losses of subsequent Accounting Periods shall be adjusted to take into account the reversal of any such timing difference.
      Amended (as from 18th June 2014)

    • Article 68 - Funding Costs of Islamic Financial Institutions

      (1) In computing Chargeable Profits or tax losses for an Accounting Period, an Islamic Financial Institution is entitled to a deduction for the equivalent funding amount.
      (2) The "equivalent funding amount" for an Accounting Period is the deduction for funding costs that would be allowable under Part 4 for that Accounting Period if the Islamic Financial Institution were a Conventional Financial Institution funding its operations using Conventional Finance Transactions, less the actual funding amount.
      (3) The "actual funding amount" for an Accounting Period is the deduction for funding costs actually allowable for that Accounting Period under Part 4.
      (4) "Funding costs" means the cost of servicing debt obligations, excluding capital repayments.
      (5) The transfer pricing provisions of Part 8 apply to the calculation of the equivalent funding amount in Article 68(2).
      Amended (as from 18th June 2014)

    • Article 69 - Taxation of Islamic Finance Transactions

      (1) This Article applies to any QFC Entity entering into an Islamic Finance Transaction with an Islamic Financial Institution.
      (2) If on making a claim a QFC Entity can show, to the reasonable satisfaction of the Tax Department, that by entering into an Islamic Finance Transaction it has either—
      (a) paid an amount of tax earlier; or
      (b) over the period of the transaction paid a greater amount of tax, than would have been the case if the transaction had been entered into as a Conventional Finance Transaction, then an adjustment may be made to the self-assessment of the QFC Entity for the Accounting Periods covering the period of the transaction.
      (3) An adjustment under this Article shall be such as is required to put the QFC Entity in the same position, with respect to its liability to tax, that would have been the case if the Islamic Finance Transaction had been entered into as a Conventional Finance Transaction.
      Amended (as from 18th June 2014)

    • Article 70 - Islamic Finance and Special Purpose Company

      An LLC, a QFC Partnership or Other Permitted Form of QFC Entity incorporated in Qatar and established solely for the purposes of supporting or facilitating an Islamic Finance Transaction may elect for special exempt status in accordance with Part 14.

      Amended (as from 18th June 2014)