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Misuse of Islamic Banking for Tax Evasion - Modaraba in Pakistan

Christian Lorenz

Modern Islamic finance emerged from a belief that conventional forms of financing may contain elements prohibited by Sharia, since the Quran forbids taking interest. As an alternative, a myriad of Islamic financial transactions have been innovated based on a combination of classical trade-based contracts and other accompanying arrangements. These products are deemed to be in compliance with Sharia precepts, yet provide some level of economic parity with comparable forms of conventional financing