The method used to tap the real attitude of the main Islamic industry players in Lebanon has raised several questions:
• Can Lebanon be an attractive hub for the Islamic finance industry?
• Can Lebanon attract those investors?
• What can Lebanon offer?
• What is the real problem, if any, impeding the newborn finance industry, and what is preventing it from adding value to the national economy?
1. Comments and criticism of the actual regulations
One of the most common criticisms is that the law links unrestricted accounts’ deposit revenues to overall Islamic finance institutions’ performance revenues.
2. Proposed solutions
The solutions proposed by Islamic financial institutions include:
a. Amend the regulation on unrestricted deposit accounts, to remunerate them from the results of the revenues of the portfolios they were invested in, and not from the entire bank’s operations;
b. Amend the regulation to authorize Islamic fi nancial institutions to receive short-term deposits of less than six months;
c. Eliminate the double stamp taxation, applying the stamp tax only on the final end user and owner;
d. Consider an exemption of multitaxation on multiple Islamic contracts when they pertain to one single transaction and operation;
e. Allow Islamic financial institutions to be exempt from value added tax when acquiring an asset that is bound to be transferred to its end
user and owner, at the maturity of the contract;
f. Amend the law subsidizing the interest payment for housing loans by conventional banks to include the revenues on housing operations by Islamic institutions; and
g. The central bank should remunerate the reserve deposits of Islamic financial institutions by a revolving Murabahah operation, so that those revenues could be accepted by such institutions.
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|Publication:||Islamic Finance News|
|Title:||Country report: Evaluation of the status of the Islamic finance industry in Lebanon|
|Practice:||Corporate and M&A, Banking & Finance, Commercial|
|Authors:||Johnny El Hachem|