Ireland outlines tax laws for Shariah-compliant products

Ireland, like other European countries, is warming to Islamic finance and Dublin has emerged as an Islamic investment fund rival to the Channel Islands and Luxembourg. Indeed several Shariah-compliant funds are registered there, including the Oasis Crescent Global Equity Fund which is based in Dublin and so is the planned CIMB Global Islamic Equity Fund which is due to be launched over the next month or so.

Last week the Irish Revenue Service, the tax authorities, outlined in detail the tax treatment of Shariah-compliant products and structures for the funds, leasing and Takaful (Islamic insurance) industries.

Part 27 of the Taxes Consolidation Act (TCA) 1997 governs the taxation of funds. Chapter 1A of that Part applies the gross-roll-up taxation regime to all funds set up after March 31, 2000. According to the Revenue Service, the regime does not impose an annual tax on the profits of the fund but requires the fund/fund manager to deduct and account for tax out of payments made to unit holders - except for certain classes of unit holder who can, by use of a declaration procedure, be paid gross. Provided the fund is constituted in accordance with Chapter 1A, these arrangements apply irrespective of whether the fund is a Shariah-compliant fund or a conventional fund.

Any income received by a service provider, which is linked to the profits or performance of a fund should be treated as fee income where it relates to duties performed by the service provider. There is no specific VAT exemption for funds but would depend on the activities of the fund.

There is no stamp duty on the issuance or redemption of units/shares in a fund. In addition, the transfer of units/shares in a fund is not chargeable to stamp duty to the extent that the fund is an investment undertaking within the meaning of section 739B of the TCA 1997 or a common contractual fund within the meaning of section 739I of the TCA 1997.

As for Ijarah (leasing) transactions, the Irish Revenue Service says the provisions of the Taxes Consolidation Act 1997 will apply as if the Ijarah arrangement in relation to operating leases were a conventional operating lease arrangement, or if the Ijarah Muntahia Bittamleek in relation to finance leases were a conventional finance lease. Accordingly, a company that accounts for the transaction as a finance lease under generally accepted accounting practice may be taxed in accordance with the provisions of section 80A TCA 1997, in respect of relevant short term leases on making a claim and the Ijarah arrangement in relation to hire purchase, were a conventional hire purchase arrangement.

However, this confirmation is limited to Ijarah that refers to the leasing of plant and machinery and other chattels. It does not apply to the lease of immovable property.

Where the lease contract requires the lessee to make an additional payment toward a charitable cause in the event of a lease rental becoming overdue, the transaction will be treated as if the lessee had made the payment directly to the lessor and the lessor made the payment toward the charitable cause (which is in fact the normal sequence of payments). The lessee will be entitled to a deduction and the lessor will be treated as having received the income but will be entitled to a deduction under section 848A TCA 1997, subject to the provisions of that section.

There is no stamp duty for Ijarah (Leasing and Hire Purchase) arrangements where the asset involved does not comprise immovable property or an interest in immovable property. The VAT treatment of an Ijarah (Finance Lease and Hire Purchase) arrangement in relation to immovable property transactions will depend on the specifics of the agreements. Generally, such agreements are likely to be regarded as the supply of a freehold equivalent interest by the lessor to the lessee at the time the agreement is entered into. As regards arrangements which cover goods other than immovable property, the normal VAT rules concerning leasing (a supply of services), transfer of title (supply of goods) or hire purchase (a supply of goods), as appropriate, would apply.

Previous guidance given by the Revenue Service in relation to the taxation of conventional operating and finance leases and to hire purchase arrangements will, in substantially similar circumstances, also apply to the equivalent Ijarah transactions.

In relation to General Takaful and ReTakaful arrangements, contributions received by a Takaful provider from policyholders (Takaful members) and by a ReTakaful company from Takaful companies, as members of the ReTakaful arrangement, are to be treated as taxable income. Whether the income is on the trading account will depend on the facts and circumstances of the case.

The Revenue Service confirmed the deductibility of expenses incurred by a Takaful company or a ReTakaful company for management, marketing, and claims and commissions should be treated in the same way as such expenses were incurred by a conventional insurance or a reinsurance company with the same level of activity. Similarly, the deductibility of a contribution payment paid to a Takaful or a ReTakaful company is to be treated in the same way as an insurance or reinsurance premium for a conventional insurance policy or a reinsurance arrangement.

The provisions of sections 76 to 83 of the Taxes Consolidation Act 1997 apply in respect of the taxation of a Takaful or a ReTakaful arrangement as if such arrangements were conventional insurance or reinsurance arrangements respectively. In addition, the taxation of a Family (Life) Takaful company, which is an assurance company within the meaning of section 730A TCA 1997, and its members (policyholders) is to be determined under Chapters 4 and 5 of Part 26 of the Taxes Consolidation Act 1997. In this regard, an amount paid by an insured person is to be treated in the same way a payment under a conventional life assurance policy is. Similarly, a maturity or claim amount paid by a Family (Life) Takaful company is to be treated in the same way a claim or maturity payment under a conventional life assurance policy is.

As there are no existing Family (Life) Takaful arrangements in Ireland, the provisions relating to the taxation of old basis business should not apply to the Family (Life) Takaful arrangements.

Under the VAT Act 1972, Takaful (General and Family (Life)) and ReTakaful arrangements are exempt from VAT under paragraph (xi) of the First Schedule to the Act. But a liability to stamp duty under the Stamp Duties Consolidation Act (SDCA) 1999 will arise in relation to policies of insurance or policies of life insurance issued under Takaful (General and Family (Life)) and ReTakaful arrangements where the risk is located in Ireland.

By Mushtak Parker

PCHR Condemns IOF's Raid of al-Aqsa Mosque

GAZA, October 26, 2009 (WAFA)- The Palestinian Center for Human Rights (PCHR) strongly condemned the Israeli Occupation Forces (IOF) raid of the al-Aqsa Mosque in occupied East Jerusalem on Sunday morning, and their use of excessive force against Palestinian civilians who attempted to stop the raid.

The raid and related incidents followed a call by extremist Jewish groups, particularly the 'Organization for Human Rights on the Temple Mount,' urging extremist Jews to break into the al-Aqsa Mosque and its yards to conduct Talmudic rituals to mark Rambam's ascension. Since Saturday night, IOF have been intensively deployed throughout the Old City of Jerusalem. The al-Aqsa Mosque and worshipers had previously been subjected to a similar assault on 27 September 2009, when a number of Israeli settlers attempted to break into the yards of the Mosque.

According to investigations conducted by PCHR, at approximately 08:00 on Sunday, 25 October 2009, the Israeli police and 'Border Guards' broke into the yards of the al-Aqsa Mosque in the old town of occupied East Jerusalem. Some police units closed all gates of the Mosque.

According to eyewitnesses, heavily armed Israeli forces broke into the yards of the al-Aqsa Mosque through the al-Maghariba Gate in the west side of the Mosque. IOF employed sound bombs and tear gas and chased and violently beat worshipers and other individuals in the yard, including women, children and elderly people. IOF also closed all the Mosque's gates and arrested the guards. At least 200 worshipers were trapped inside the Mosque, as IOF closed the doors with iron chains and locks. IOF did not allow the entry of food and water to those who were held inside the Mosque. A number of worshipers suffered from tear gas inhalation. In the meantime, an Israeli police aircraft had been hovering over the area since the morning.

At approximately 10:00, IOF broke into the room designated for the Azan (the call for prayers) and damaged equipment; the Azan was not transmitted.

At approximately 11:00, the Israeli police dispersed a peaceful demonstration organized by women who were on their way from Bab Hatta area towards the al-Aqsa Mosque to express solidarity with those who were inside the Mosque.

At approximately 11:30, IOF allowed men aged over 50 to enter the al-Aqsa Mosque. However, less than half an hour later, IOF broke into the yards again and violently beat all those who were in the area, including two journalists and three paramedics. They also arrested a number of Palestinian civilians, including Hatem Abdul Qader, Member of the Palestinian Legislative Council, but released them later. IOF also besieged a number of worshipers in the Dome of the Rock Mosque and the Southern Mosque after locking the doors. IOF further prevented journalists and medical crews from entering the al-Aqsa Mosque.

Clashes between Palestinian civilians and the Israeli police continued until the afternoon. According to medical sources, 25 civilians, including 7 women, were injured. Most injuries resulted from violent beating, tear gas and shrapnel from sound bombs.

PCHR strongly condemns repeated attacks by IOF against the al-Aqsa Mosque, and stresses that:

1) East Jerusalem is an integral part of the Palestinian Territory that were occupied by Israel following the June 1967 war.

2) Measures taken by Israeli occupation authorities following the occupation of the city, in the foremost, the Israeli Knesset's decision on 28 June 1967 to annex the city, its decision on 30 July 1980 considering 'complete and united Jerusalem as the capital of Israel' and the decision to expand the municipal boundaries, a flagrant violation of international law and United Nations resolutions.

3) Measures and plans implemented by Israeli occupation authorities in occupied Jerusalem can never change its legal status.

4) Such actions are in violation of Article 53 of the Protocol Additional to the Geneva Conventions of 12 August 1949, and Relating to the Protection of Victims of International Armed Conflicts (Protocol I). Article 16 of Protocol I prohibits ' any acts of hostility directed against historic monuments, works of art or places of worship which constitute the cultural or spiritual heritage of peoples, and to use them in support of the military effort.'

5) Article 49 of the Fourth Geneva Convention of 1949 prevents the Occupying Power from 'deporting or transferring parts of its own civilian population into the territory it occupies.'

In light of the above:

1) PCHR calls upon the High Contracting Parties to the Fourth Geneva Convention, jointly or individually, to fulfill their legal and moral obligations to ensure Israel's respect for the Convention in the Occupied Palestinian Territory (OPT) according to Article 1 of the Convention, and believes that the international silence and inaction encourage Israel to act as a State above law and perpetrate more violations of international human rights and humanitarian law, including efforts intended to establish a Jewish majority in occupied East Jerusalem.

2) PCHR calls upon the international community to immediately act to force the Israeli government to stop all settlement activities in the OPT, especially in East Jerusalem, and to dismantle existing settlement, the existence of which constitute war crimes under international humanitarian law.

3) PCHR calls upon the European Union and/or its Member States to activate Article 2 of the Euro-Israeli Association Agreement, which links continuous economic cooperation between the two parties with Israel's respect for human rights, and to stop dealing with Israeli products, especially those produced in Israeli settlements in the OPT, including East Jerusalem.

ISESCO Denounces Breaking into Al-Aqsa Mosque

RABAT, October 26, 2009 (WAFA)-The Islamic Educational, Scientific and Cultural Organization (ISESCO) strongly denounced the breaking into the holy shrine of Al-Haram Al-Sharif by the Israeli police and the use of bombs against the Palestinians who stationed themselves at the Al-Aqsa Mosque in East Jerusalem.

In a communiqué released today, ISESCO called on the international community to intervene and put pressure on Israel to stop its continuous attacks on Al-Aqsa Mosque, in compliance with the international laws which prohibit attacking places of worship and religious symbols and altering the historical and geographical landmarks of the Occupied Palestinian territory.

Saudi king spares journalist lashes

Saudi Arabia's king has pardoned a female journalist sentenced to 60 lashes for her role in a television show in which a Saudi man detailed his sexual exploits.

A government official announced the pardon of Rosana Al-Yami, who had been charged with helping to produce the controversial program, on Monday.

"In this case, the flogging has been dropped," Abdul-Rahman al-Hazzaa, an information ministry spokesman, said.

He said that the case of al-Yami and another journalist would be transferred to a ministry committee for possible disciplinary action.

Al-Yami told the Reuters news agency: "The king has vindicated me. I am satisfied with the king's order and I accept the decisions of the sovereign."

Sex tips

Al-Yami worked as a coordinator for the popular show "Ahmar Bilkhat al-Areed", or Bold Red Lines, but has denied involvement in the particular episode in July that prompted the charges.

In that episode of the show, aired by the mainly Saudi-owned Lebanese Broadcasting Corporation (LBC), Mazen Abdul-Jawad, a Saudi man, spoke openly of his sexual experiences including giving tips on how couples can spice up their sex lives.

On camera from his bedroom, he spoke about how he picked up girls in the city of Jeddah and had sex with them.

Earlier this month, Abdul-Jawad was sentenced to five years in jail and 1,000 lashes.

Sulaiman al-Jumeii, his lawyer, maintains that Abdul-Jawad was duped by LBC and was unaware in many instances that he was being recorded.

Justice sought

On Monday, al-Jumeii urged the information minister to intercede with the king to include all those involved in the case under the same ministry committee.

"They are being tried by a court that is not specialized in this issue and has not even summoned LBC or watched the raw film," al-Jumeii said in a statement.

"Justice should not be divided as long as it is one case."

Three other men who appeared on the show were also convicted of discussing sex publicly and sentenced to two years imprisonment and 300 lashes each.

The LBC's two offices in the kingdom have been shut down.

Saudi Arabia prohibits sexual content on television and in newspapers, magazines and books.

Source: al-Jazeera.
Link: http://english.aljazeera.net/news/middleeast/2009/10/20091026165235248376.html.

Meshaal urges Arab action on Aqsa

Khaled Meshaal, the exiled leader of Hamas, has called for a freeze on the Arab peace initiative with Israel in response to its police action in al-Aqsa mosque.

He accused Israel of wanting to "destroy" Jerusalem's revered al-Aqsa mosque, the scene of clashes on Sunday as Israeli police battled Palestinian worshipers.

"It is the first step towards dividing the mosque, a prelude to demolishing it and building a temple," Meshaal said in a speech in the Syrian capital Damascus, where he is based.

Meshaal urged the Palestinian leadership to halt negotiations with Israel and to make the level of its reaction similar to that of the Israeli practices in Jerusalem's Old City.

'Protect al-Aqsa'

Dozens of people, most of them Muslim worshipers, were wounded on Sunday in confrontations between Israeli police and Palestinians in and around the holy site revered by Muslims as al-Haram al-Sharif and by Jews as the Temple Mount.

"Jerusalem belongs to its Arab inhabitants, Muslims and Christians. The future (of the city) will not be settled at the negotiating table but on the ground of confrontation and resistance," Meshaal said.

The Arab peace initiative offers a road map for normalization of ties between Arabs and Israelis in return for an Israeli pullout from occupied Arab lands.

Saudi Arabia launched the initiative in 2002.

Meshaal has called for rallies to express rage and solidarity with the Palestinians staging a sit-in inside al-Aqsa mosque, and addressed Recep Tayyip Erdogan, the Turkish prime minister, in particular to intervene to protect the mosque.

Regarding political settlement with Israel, Meshaal said that the US, under President Barack Obama, had failed to convince Israel to halt settlement activities for a year.

He said the Obama administration adopted the Israeli demand for Arab countries to recognize Israel as a Jewish state.

Aziz al-Dweik, speaker of the Palestinian Legislative Council, told Al Jazeera that "the occupation is going on with its scheduled plan to demolish the al-Aqsa mosque, God forbid it, and to keep prayers away from it."

Speaking to Al Jazeera from the West Bank city of Hebron, Dweik said that the Palestinian-Israeli negotiations process "gives the occupation a green light to continue messing with our capabilities and sanctities".

"I ask the [Palestinian] negotiator if he has managed, through negotiations, to prevent the aggression against and the desecration of the al-Aqsa mosque," he said.

Israel 'cuts Palestinians water'

Israel is denying Palestinians access to even the basic minimum of clean, safe water, Amnesty International says.

In a report, the human rights group says Israeli water restrictions discriminate against Palestinians in the occupied West Bank.

It says that in Gaza, Israel's blockade has pushed the already ailing water and sewage system to "crisis point".

Israel says the report is flawed and the Palestinians get more water than was agreed under the 1990s peace deal.

'Basic need'

In the 112-page report, Amnesty says that on average Palestinian daily water consumption reaches 70 litres a day, compared with 300 litres for the Israelis.

It says that some Palestinians barely get 20 litres a day - the minimum recommended even in humanitarian emergencies.

While Israeli settlers in the West Bank enjoy lush gardens and swimming pools, Amnesty describes a series of Israeli measures it says are discriminating against Palestinians:

* Israel has "entirely appropriated the Palestinians' share of the Jordan river" and uses 80% of a key shared aquifer
* West Bank Palestinians are not allowed to drill wells without Israeli permits, which are "often impossible" to obtain
* Rainwater harvesting cisterns are "often destroyed by the Israeli army"
* Israeli soldiers confiscated a water tanker from villagers who were trying to remain in land Israel had declared a "closed military area"
* An unnamed Israeli soldier says rooftop Palestinian household water tanks are "good for target practice"
* Much of the land cut off by the West Bank barrier is land with good access to a major aquifer
* Israeli military operations have damaged Palestinian water infrastructure, including $6m worth during the Cast Lead operation in Gaza last winter
* The Israeli-Egyptian blockade of Gaza has "exacerbated what was already a dire situation" by denying many building materials needed for water and sewage projects.

The report also noted that the Palestinian water authorities have been criticized for bad management, quoting one audit that described the sector as in "total chaos".

"Water is a basic need and a right, but for many Palestinians obtaining even poor-quality, subsistence-level quantities of water has become a luxury that they can barely afford," Amnesty's Donatella Rovera said.

"Israel must end its discriminatory policies, immediately lift all the restrictions it imposes on Palestinians' access to water."

'Fair share'

Ms Rovera also urged Israel to "take responsibility for addressing the problems it created by allowing Palestinians a fair share of the shared water resources".

Israeli government spokesman Mark Regev said "the idea that we're taking water away from someone else is simply preposterous".

He argued that Israeli fresh water use per capita had gone down since 1967 due to efficiency and new technologies, while the Palestinians' use had increased and more than a third of their water was wasted.

If there were allegations of military wrongdoing, those would be investigated, he said.

He also rejected the claim that Israel was preventing Palestinians from drilling for water, saying Israel had approved 82 such projects but the Palestinians had only implemented 26 of them.

"They have received billions of dollars in international aid over the last decade and a half, why have they not invested that in their own water infrastructure>?" he asked.

The report also criticized the Oslo Accords, which the Palestinians agreed to in 1993.

It said that under them, the Palestinians gained the responsibility for managing an "insufficient" water supply and maintaining "long neglected" water infrastructure.

Also, the deal left the Palestinians paying Israel for half of the domestic water used in the West Bank, despite the fact it is extracted from the shared aquifer.

Mr Regev said Israel provides the Palestinians with more water than it was required to under the accord.

Somali threat sparks Uganda alert

All Somali visitors and refugees arriving in Uganda are to be registered in response to militants threatening to attack the capital, Kampala.

Somali community leaders living in Kampala said they would help to root out any insurgents.

It comes after al-Shabab said they would attack Kampala because Ugandan soldiers were serving with the African Union peacekeeping force in Somalia.

Islamist insurgents control much of southern and central Somalia.

In the capital, Mogadishu, they are fighting for control with troops loyal to the government, which is backed by UN and AU peacekeepers.

Numerous threats

The BBC's Joshua Mmali, in Kampala, says many Somalis in Uganda have unclear refugee status, so fear any unwanted attention.

They believe an al-Shabab attack on Kampala would lead to indiscriminate arrests in search of the perpetrators.

Following the threat by al-Shabab, Somali elders met Ugandan security officials to discuss combating the threat.

"We are ready to help the government to report any movement of these people," said Abdulaye Hassan Roble, a Somali community leader in Uganda.

"If they [al-Shabab] appear here in Uganda we shall report them to the government."

Al-Shabab also threatened to attack Burundi's capital Bujumbura because their soldiers are also deployed in Somalia.

It comes weeks after al-Shabab fighters also threatened Kenya after accusing its government of recruiting troops to fight for the Somali government.

Somalia last had a functioning central government in 1991.

Since then numerous armed groups have been fighting for control.

Islamist rebels who are accused of having links to al-Qaeda dominate much of southern and central Somalia, while the government runs only parts of the capital, Mogadishu.