Ireland emerging as epicenter for Islamic finance in West

Source: Irish Times

Despite the fact that Ireland still has a relatively small Muslim population – at about 50,000 according to the 2011 census – Ireland has nonetheless emerged as a major global centre for Islamic finance.

Earlier this year Taoiseach Enda Kenny said the Government was “determined to ensure that the IFSC is a centre of excellence for Islamic finance”.

About 20 per cent of all Sharia funds located outside of the Middle East are now based in Ireland, while the industry here services about €2.5 billion worth of funds. In 2010, the Government published extensive tax legislation in the Finance Act to facilitate a wide variety of Islamic finance, such as debt capital markets, securitisation and investment funds. Moreover, Ireland has double tax treaties in place with 67 countries including Turkey, Malaysia, the UAE, Bahrain and Kuwait.

More recently, it has positioned itself in the debt space, with Goldman Sachs listing a $2 billion sukuk on the Irish Stock Exchange late last year. The Sharia-compliant bond acts as a trustee and seller of “murabaha” trust certificates. Murabaha is a contract whereby the seller must disclose its profit to the buyer.

But despite the hype, Islamic finance still remains a small segment of the overall international financial services market in Ireland, given that the total funds industry is worth about €2 trillion. “It’s a reasonable number but is growing,” notes Quinn.

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