To start with, the several double taxation treaties that have been signed with the Gulf countries but none of them is yet in force. The situation is different with Malaysia, Singapore and Indonesia with whom double taxation treaties are already implemented. Currently, the numerous transactions involved in Islamic finance products trigger multiple taxations making them more expensive.
Fiscal policy should take the economic finality into account so as to avoid distortion discriminating against Islamic finance products. Dividends are still facing differentiated treatment from investors. Luxembourg should envisage enabling the deduction of remunerations other than interest payments, allowing the amortization of leased goods outside conventional leasing contracts, and recognizing margins made on sukuk transactions as interest payments instead of profits.