Ireland is the jurisdiction of choice for internationally distributed investment funds, used as a gateway by the world’s leading fund promoters to establish and service investment funds which are sold to investors across the globe. Following the adoption of facilitative regulation and legislation, together with the creation of an International Financial Services Centre (IFSC), the international investment funds industry in Ireland has more than 20 years’ experience and expertise and today is one of the world’s leading fund domiciles and administration centers, servicing assets worth over EUR1.8 trillion in some 11,000 funds. Due to the robust and efficient regulatory and tax environment, wide range of specialist expertise, high quality business-friendly environment and the ease of global distribution offered by an Irish fund platform, more than 850 fund promoters from over 50 countries have chosen Ireland as their international fund hub.
As a leading center for internationally distributed UCITS funds, the globally recognized investment fund product that has become the universal standard for regulated investment funds, Irish authorized UCITS are distributed in 70 countries. The world’s leading center for the administration of alternative investments, servicing in excess of 40% of global alternative investment fund assets, Ireland has unrivalled expertise in the administration of sophisticated investment products and is benefiting from the recent trend towards greater regulation and transparency. Demonstrating innovation and thought leadership in new regulatory and market developments, Ireland was the first jurisdiction to provide for regulated hedge fund products and continually leads on policy and practice in anticipation of the industry’s continuously evolving requirements.
Home to 50 world class fund service providers and with a support structure of over 11,000 industry professionals, Ireland offers the widest range of expertise in fund domiciling and servicing. The Irish funds industry offers a complete range of services including fund set-up, structuring and listing, fund administration, depositary and transfer agency services, compliance, consultancy, tax, audit and legal services. Irish fund structures can include the broadest spectrum of investment policies from ‘long only’ retail funds to sophisticated investment strategies. With no tax liability at fund level, the tax efficiency of Irish investment funds is further enhanced by access to Ireland’s double taxation treaty network which extends to 60 countries. With openness, transparency and regulation as the pillars of the industry, Ireland leads the global industry in compliance with internationally agreed tax standards.
Building upon the foundation of UCITS and conventional fund products, in recent years the Irish authorities have extended and developed the regulatory and tax environment to provide the same effective and efficient investment fund products using both conventional and Islamic financial instruments. Highlighting these developments the Irish Prime Minister during 2011 noted: “We are determined to ensure that the IFSC is a center of excellence for Islamic finance and the changes in recent Finance Acts will support its development,” as he referred to the confirmation provided by the Irish office of the Revenue Commisioners that Shariah compliant funds, Ijarah transactions and Takaful arrangements were to be taxed on the same efficient basis as comparable conventional financial products. This added to the 2010 amendments to Irish tax laws to include Islamic banking products and Sukuk issuances. Ireland’s corporation tax rate remains at 12.5% and no Irish stamp duty arises on the issue, transfer or redemption of a Sukuk certificate. Islamic finance transactions, where those transactions correspond to VAT exempt financial services transactions, are also exempt from Irish VAT.
These enhancements to the tax framework add to the previous developments in the regulatory environment, where the Central Bank of Ireland has an established Shariah Funds Specialist Unit to ensure Shariah funds can be authorized with consistency and efficiency. With 20% of the Islamic funds market outside the Middle East now located in Ireland there are many fund promoters from MENA who have funds domiciled or serviced in Ireland with total assets under administration of nearly EUR2 billion, according to Lipper. The industry in Ireland supports and services promoters from Kuwait, Lebanon, Saudi Arabia and UAE with funds investing in areas from Global to Emerging Africa & Middle East to US and the Far East/Pacific.
As we leave 2011, a year of some uncertainty, and as we enter 2012 one thing is certain: Islamic finance is one of the major growth areas in international finance and the industry and authorities in Ireland will continue to provide the product solutions, operating efficiencies and international opportunities to assist this growth be realised.
Gary Palmer is chief executive at the Irish Funds Industry Association. He can be contacted at
[email protected]
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