Clarification of tax treatment of Islamic finance transactions
The Luxembourg Tax Director has published a Circular underlining the fact that Shariah compliant financial products receive the same tax treatment as conventional financial products. The news will reassure investors who wish to manage their investments in a way that respects Islamic values. The Tax Director specifies that collective investment schemes (CIS) are excluded from the Circular. As in most other countries, CIS are not liable for corporate tax in Luxembourg. Islamic finance is one of the priority areas of the Luxembourg Government in the framework of its policy for the diversification of the financial centre. Two Task Forces are working to further this ambition: the first, within the Ministry of Finance, is monitoring the development of Islamic finance activity while the second, organised by Luxembourg for Finance, is focusing on operational aspects.