Taxes Consolidation Act 1997 section 267R

Treatment of investment return

Section 267R sets out the tax treatment of investment returns arising from Islamic finance investment (sukuk) transactions.

• An investment return is treated for tax purposes as if it were interest on a security and is chargeable to tax accordingly.
• The section is subject to section 130, which ensures that any investment return similar to a distribution is not treated as interest.
• Revenue will generally not regard the return as dependent on the results of the business where the return equates in substance to a commercial return and the expected rate of return is equivalent to interest on a conventional investment.
• Where the conditions are not satisfied, section 130 applies to re-categorise the full amount of the investment return as a distribution.