(Clarifies fee structure in 7th par)
By Bernardo Vizcaino
June 12 A British government investment scheme
could become a platform for Islamic financial investments in the
country, says a company which is using the scheme to establish a
small solar power plant.
The government's Enterprise Investment Scheme (EIS) helps
small trading companies raise finance by offering tax relief to
British-based Islamic financial advisory firm Simply Sharia
plans to raise 3 million pounds ($5 million) by the end of June
to build the solar plant, using the tax relief to create a
wakala funding structure, said chief executive Faizal Karbani.
The project has been vetted by Bahrain-based Islamic
advisory firm Shariyah Review Bureau and will be managed by
London-based Gardner Asset Management LLP, which is now seeking
a suitable site for the solar farm in Britain.
Islamic finance has grown rapidly in its core markets in the
Middle East and southeast Asia, but expansion elsewhere has been
slow partly because asset transfers expose sharia-compliant
structures to high taxation.
EIS could address this issue as it provides investors with
income tax relief at 30 percent, capital gains tax exemption,
loss relief and 100 percent inheritance tax relief.
Under the wakala structure used by the solar project, one
party acts as agent (wakil) for another, charging an agency fee
and a performance fee which mirrors the setup of a conventional
Revenues will be generated from government-backed renewables
obligation certificates, which are tradable green certificates
issued by the government to producers of renewable electricity,
and from selling power generated by the solar farm, said
(Editing by Andrew Torchia)