According to Fitch Ratings, the plan to introduce Value Added Tax (VAT) in Gulf Cooperation Council (GCC) member states could be a key test for the region's Islamic finance industry. Saudi Arabia and Bahrain approved the implementation of VAT in the GCC, however, local implementation laws must still be agreed in each country. This paves the way for the introduction of an expected 5% VAT rate as early as the beginning of 2018. Without tax neutrality or equality rules, the introduction of VAT would put Islamic finance transactions at a disadvantage to conventional transactions. A VAT charge adds to the instalment payments in a murabaha, while a conventional transaction would not have VAT for the sale of the asset added to the interest payments. Numerous countries with VAT have provided for some form of tax neutrality or equality for Islamic finance transactions, including Malaysia, Indonesia, Turkey and Pakistan.
A bill eliminating legislative obstacles to the commission of leasing transactions in accordance with Islamic finance was introduced to the State Duma. The changes are to be made to the law «On Financial Rent (Leasing)». The bill allows separating the two transactions lease and sale in time. So in order to do that, it is suggested to amend the current law and add that the transfer of ownership will be covered in the lease agreement, like in the current model, or in the separate purchase and sale agreement, which then will be Shariah compliant. The drafted bill also provides the possibility, by an agreement of the parties, to avoid penalties for past due payments.
During last six months, the Government of the Republic of Tatarstan and the Malaysian-Russian consortium comprising UNIRAZAK, IBFIM and IBFD Fund have been working up on the possibility of preparing the feasibility study on launching Islamic banks or Islamic banking windows on the territory of the Republic of Tatarstan as a pilot region for the introduction of Islamic banking and finance in the Russian Federation. The Feasibility study includes main principles and philosophies of Islamic finance, strategies and approaches of Islamic banking and takaful implementation, market study on the potential Islamic finance consumers, considerations and prerequisite of successful implementation.
REDmoney Events in partnership with Islamic Business and Finance Development Fund (IBFD Fund), will organize the IFN CIS & Russia Forum on the 9th of December 2015 in Moscow. The event is expected to draw market players and regulators from key Islamic finance markets globally and within the Russian Federation and CIS. Kazakhstan, Kyrgystan and Azerbaijan have developed Islamic banking since 2005 resulting in the creation of number of Islamic financial institutions. On its part, Tajikistan has recently started preparing a draft law on Islamic banking and finance. Russia as the largest country in CIS is also involved in Islamic finance development process.
Dubai Silicon Oasis Authority (DSOA) and Thomson Reuters, with support from the Dubai Islamic Economy Development Centre (DIEDC) released the 'Digital Islamic Economy Report' for 2015, in collaboration with DinarStandard. The report serves as a precursor to the second edition of the Global Islamic Economy Summit (GIES) that will be held from October 5-6 in Dubai, UAE. Among its key findings, the report estimates that the overall value contributed by Muslim consumers worldwide to the global digital economy in 2014 stood at US$107 billion, representing 5.8% of the total global digital economy. The report focuses on a new and a more specialized area of Digital Islamic Consumer Services.
Shariyah Review Bureau (SRB) has signed a strategic partnership with Russia-based Islamic Business and Finance Development Fund (IBFD Fund) to become its Official Sharia Advisory Partner. Under the agreement, IBFD Fund’s partnership will leverage SRB’s extensive Shari’a consultation footprint and scholarly network to promote, upgrade and administer Russian financial establishments to set up Sharia compliant funds and transactions. Alongside the Sharia Advisory activities, the engagement will see SRB focus on developing and building its scholarly capabilities in the Russian language while IBFD Fund will add promotional service locations to its existing network as well as increasing their overall capabilities. The partnership will also strengthen credibility between CIS and GCC countries in the domain of Islamic finance.
Ahmed Mohammed Ali Al-Madani came for the visit with the head of Russian Central bank Elvira Nabiullina, being accompanied by the President of the Republic of Tatarstan Rustam Minnikhanov. The trip has been organized within the framework of the visit of the Islamic Development bank (IDB) head to the VII International Economic summit of Russia and OIC countries – KazanSummit 2015. During the meeting, Ahmed Mohammed Ali Al-Madani told about the history of the IDB and the principles of its operation. He noted that today Islamic banking is represented even in countries, where there is no Islam, for instance, in China.
The rector of the Russian Islamic Institute (RII) Raffick Mukhametshin awarded the degree of honorary professor, a gown and a diploma to Dr. Ahmad Mohamed Ali Al Madani, the President of the Islamic Development Bank. The ceremony was held in the framework of the Strategic Forum of the VII International economic summit of Russia and the OIC - KazanSummit 2015. Ahmad Mohamed Ali Al Madani arrived to Kazan to participate in the VII International Economic Summit Of Russia and OIC countries and became a guest of Honor of the annual KazanSummit. Head of the Islamic Bank delivered a speech at the Strategic Forum of the summit.
"Islamic Finance for Constructive Global Trade and Investment" is the main theme of the VII International economic summit of Russia and member countries of the Organisation of Islamic Cooperation (OIC) – KazanSummit 2015, which will be held on June 15-16th in the third capital city of Russia – Kazan. The observer status of OIC that the Russian Federation received in 2005 provides the base for the improving interrelations between Russia and OIC member countries. Hence KazanSummit is the main platform for developing relations between Russian regions and OIC member countries that takes an economic cooperation to the international scene.
As reported in the lower chamber of parliament, the draft law that removes barriers for implementing Islamic banking in Russia is submitted in the State Duma. If the document is accepted, the appropriate amendments will be made in the federal law on «Banks and banking activity». The explanatory note to the draft law mentions that attracting Islamic investments is an extremely effective tool in conditions of difficult economic situation. It is stated that within economic development strategy of Russia giving a chance to Islamic finance means to attract a large number of additional investment, in conditions of crisis economy to help Russia develop a new economy based not on raw materials’ money.
The 12th IFSB Summit will be hosted by The National Bank of Kazakhstan. The theme of this year’s Summit is «Core Principles for Islamic Finance: Integrating with the Global Regulatory Framework». The 12th IFSB Summit will focus on the major development in the supervision and monitoring approach to the Islamic financial services industry. In particular, various sessions in the Summit will address the role of the Core Principles in enhancing the regulatory consistency and resilience of the Islamic financial services industry as well as enabling the necessary frameworks and pre-conditions for the assessment of regulatory and supervisory regimes.
The date for the Kazan Sukuk Conference has been shifted to Thursday, April 9, 2015. The location of the conference will remain the same, the 5-star Mirage Hotel in Kazan, Tatarstan, Russia. This change was made according to the desire of participants and speakers of the Conference. The Conference brings together over 100 representatives of the Russian government, regulators, business entities and international sukuk market players to discuss sukuk structures and their application, jurisdictions and platforms for sukuk issuances, investment projects and underlying asset pools, regulation and Sharia issues. To get more information about the event please visit: www.kazansukuk.ru.
The busiest year on record for sovereign Islamic bond sales is poised to be eclipsed as a revival in corporate issuance takes hold in 2015. Companies in the U.K. and Hong Kong may be among those selling sukuk this year as they follow debut issues from their governments. Corporates in the Gulf Cooperation Council will be encouraged to tap the market as bank liquidity and credit conditions deteriorate amid declining oil prices. Besides, decreasing bank liquidity and demand for public debt will make sukuk issuance more attractive for GCC corporate borrowers this year.
Elvira Nabiullina, the chairman of the Central Bank of Russia, stated in the Federation Council that they are exploring the subject of Islamic banking regulation. Previously, the Association of Russian Banks (ARB) offered to issue a different license for Islamic banking. Russian banks note the rising demand for Islamic financial tools.
Five days long advanced training courses regarding Islamic insurance has started in the Russian Islamic Institute. Islamic Business and Finance Development Fund (IBFD Fund), Kazan (Privolzhsky) federal university, Russian Islamic University and LLC IC “Alliance Life” are organizers of the course. Important issues of nowadays are implementation of Islamic economic products at banking, insurance and other spheres, development of education in the scope of Islamic economy. Lecturers of the courses are worldwide recognized specialist at Islamic economy. Islamic insurance courses will continue up to November 21. Round-table of Islamic insurance implementation is going to be held on November 22.
On 17-21 November, 2014, RCIEF organizes an Islamic insurance course. On 22 September, the Islamic finances roundtable, with passing of resolution of Islamic insurance in Russia, will be held. International and Russian experts are invited. Courses will be held by Dr. Osman Babiker Ahmed, Maksatbet Kairgaliev, Kuralay Eldesbai, and Alfiya Salikhova at Russian Islamic University, 19, Gazovaya str, 319 lecture hall. Visiting of the course provides a practical guideline of innovative insurance products, which meet the requirements of Islamic law. For registered visitors entrance is free of charge. Deadline for application up to November 15, 2014, till 17:00. More Information is available at www.rcief.org.
The participants and honor guests of KazanSummit will be able to visit one of the most important national festivals of the people of the Volga river basin - the Sabantuy. The KazanSummit Organizing Committee allows the guests of Russia and Tatarstan to get to know the cultural and spiritual component of the life in the Republic. On June 7, there will be the excursion on the national festival Sabantuy for the participants and official delegates of KazanSummit. The Sabantuy is the largest national, multiethnic festival of the people of the Volga river basin and Russia, which is on the list of the masterpieces of the cultural heritage of the UNESCO.
A two-day forum with the participation of over 470 businessmen, foreign investors, managers of international companies, federal and regional agencies representatives was held at the Kazan Ski Resort in the Republic of Tatarstan. «Invest in Tatarstan» was organized by Tatarstan Investment Development Agency with the participation of Tatarstan Development Corporation and Tatarstan Export Corporation. Discussions of region’s attractiveness for the foreign companies and business development in the first half of the day continued with several round tables, likec health care, real estate market, and halal industry. The forum not only demonstrates investment opportunities of the region, but also gives an opportunity to discuss specific issues directly with the leadership of the republic.