The following Tax guidance note Produced in partnership with Etienne Wong of Old Square Tax Chambers provides comprehensive and up to date legal information covering:
This Practice Note outlines the UK VAT treatment of the issue of a sakk by an issuer to an investor (or sakk holder).
A sakk is a certificate that confers certain rights on the holder to receive payments from time to time. Its key characteristics are comparable to those of a bond (or similar financial instrument).
‘Sukuk’ is the plural of ‘sakk’.
A sukuk issuance is a form of Islamic financing. For more information on Islamic financing generally, see Practice Note: Key principles of Islamic finance.
For more information on other (non-VAT) tax aspects of sukuk, see Practice Notes: Sukuk—investment bond arrangements and their UK direct tax treatment, Sukuk—investment bond arrangements and stamp duty and SDRT and Sukuk al ijara—tax reliefs for sale and leaseback arrangements.
This Practice Note is written on the assumption that:
the issuer is a corporate special purpose vehicle
both the issuer and the sakk holder belong in the UK for VAT purposes in relation to the sukuk issuance
any trust property held by the issuer that constitutes land, or goods for VAT purposes, is situated (and remains) in the UK, and
each transaction entered into by the issuer or the sakk holder is with a counterparty who belongs in the UK for VAT purposes in relation to that transaction
For more information on the concept of belonging for VAT purposes, see Practice
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