The term Islamic financing means any financing arrangements which are compliant with the principles of Shari’a law. This law forbids the making or receiving interest payments.
Islamic finance arrangements will have a similar objective to other financial transactions, but are often structured in an alternative way (regarding debt). Transactions which are Shari'a compliant may or may not be treated in the same way as mainstream financial transactions which are similar in substance.
This depends on the circumstance of the financial transaction. If the transaction is treated differently it is known as a ‘specified financial transaction’.
You inform Revenue of a ‘specified financial transaction’ by submitting a:
- SFT1 Form for financial undertakings according to Section 267N of the Taxes Consolidation Act 1997
- SFT2 Form for a qualifying company according to Section 267N of the Taxes Consolidation Act 1997.
See Revenue's Tax and Duty Manual on the tax treatment of Islamic financial transactions for more details on specified financial transactions.