IslamicFinance.de

A tax waiver is needed, especially on asset transfers, to make Islamic financing in Indonesia more competitive with conventional financing. According to Qudeer Latif, a partner at law firm Clifford Chance, in the UK and Malaysia, the asset transfer tax is annulled, they categorize the asset transfer in the Islamic financing structure as a financial transaction, rather than a sales and purchase transaction. Another problem, he continued, stemmed from the high building transfer fee, which varied from 5% to 7%. The central government had tried to reduce it to 2.5%, but some regional governments still objected to it. According to the expert, changing the taxation rule will create a level playing field between Islamic and conventional financing.

The transaction documents for the financing of the power project were signed over three days of meetings and included a ceremony in Rabat attended by Abdelilah Benkirane, prime minister of Morocco. Part of the financing was provided via a structured Islamic tranche from the Islamic Development Bank and it was not possible to use the more traditional procurement/forward lease structure typically seen in Islamic project financings. The Islamic tranche represents the first multi tranche cross border Islamic financing into Morocco and the first international Islamic project financing structured in this manner. Clifford Chance was delighted and proud to help create a new and innovative structure in Islamic project financing.