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Legal Terms - Non-traditional financial arrangements
The term "Islamic finance" refers to specific lending arrangements that adhere to the principles of Islamic law, as outlined in the Finance Acts. Muslims have the potential to
I decline to participate in an agreement that involves the payment of interest, as it goes against the prohibition of riba in the Quran. Various alternative financing structures have been created to facilitate funding for housing and business acquisitions. These include murabaha (a sale with deferred enhanced payment), mudaraba (providing capital in exchange for a share of profits), wakala (an agent investing money on behalf of a principal), and diminishing musharaka (a joint ownership arrangement used for financing property or other assets). The Finance Act 2005 (sections 46-47) and Finance Act 2006 (section 95) establish a tax code in which the UK tax is imposed on the lender and the borrower is given relief, as if a certain percentage of each payment was considered interest.
The term "Islamic finance" refers to specific lending arrangements that adhere to the principles of Islamic law, as outlined in the Finance Acts. Muslims have the potential to
I decline to participate in an agreement that involves the payment of interest, as it goes against the prohibition of riba in the Quran. Various alternative financing structures have been created to facilitate funding for housing and business acquisitions. These include murabaha (a sale with deferred enhanced payment), mudaraba (providing capital in exchange for a share of profits), wakala (an agent investing money on behalf of a principal), and diminishing musharaka (a joint ownership arrangement used for financing property or other assets). The Finance Act 2005 (sections 46-47) and Finance Act 2006 (section 95) establish a tax code in which the UK tax is imposed on the lender and the borrower is given relief, as if a certain percentage of each payment was considered interest.
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