Update on the topic of Interest deductibility

Gassner's picture

Dear Reader,

Two obstacles blocking the substance of Islamic finance and destabilsing the economy, one is the risk weighting of Basle regulation discouraging banks from giving equity finance, the other the interest deductibility as cost factor discouraging corporates from taking equity finance.

At least the latter may slowly be resolved, reports FT Alphaville:

"US tax reform now contemplates ending the tax “subsidy” for interest. Ultimately, we concluded that the favoured tax treatment for debt and interest was unjustified, a position that inspired the primary private equity lobbying group to issue a 2,422 word press release assailing the FT piece."

https://ftalphaville.ft.com/2017/02/06/2183520/what-lbo-modeling-suggest...

It is worth reading completely; and I still wonder why Muslim majority countries are so slow to show any action to this adverse piece of damaging taxation.

Best regards,

Michael Gassner
www.islamicfinance.de

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