Glossary

Irish Islamic Chamber of Commerce IICC

www.Islamic-chamber.org

 IICC Glossary

AAOIFI: Accounting & Auditing Organization for Islamic Financial Institutions.

Agricultural ZAKAT:  ZAKAT payable on agricultural crops and it is classified into three main subcategories: Grains, Fruits, and Vegetables.

Sadaqat (Alms): Voluntary donations.

Arab League: The Arab League is the umbrella of the 22 Arab countries and represents the political, cultural and economic bloc for Arab Countries within the OIC.

COMSEC: Standing Committe for Economic and Commercial Cooperation for the Organization of Islamic Cooperation.

Corporation ZAKAT: ZAKAT payable by companies, it is 2.5% based on the value of the net assets (Net Worth) of the company regardless of the profit and loss status of the firm.

Double ZAKAT: Similar to double taxation, it is an imposition of two ZAKAT on same ZAKAT Category.

GCC: Gulf Cooperation Council

Gharar or (Uncertainty in Finance): Uncertainty in Islamic finance called Gharar, uncertainty occurs when there is more than one outcome to a course of action or where details concerning the sold item (Product or Service) are unknown or uncertain. Gharar is generally prohibited under Islam. The most common examples of Gharar are: Conventional Insurance, Future Market transactions.

Halal: Lawful; permitted by Sharia (Islamic Law).

Haram: Unlawful; prohibited by Sharia (Islamic Law).

Haul: The due date for ZAKAT, it is one Lunar year in most cases. ZAKAT is payable every Haul (354 days), except for cases of Agricultural crops & Rikaz.

Hawala: Literally, it means transfer.

Hijri or Hijri Year: Hijra means emigration. The Islamic calendar starts from the day where Prophet Muhammad (PBUH) emigrated from Makkah to Madeenah in 622 A.D and it is based on Lunar year.

ICCI: Islamic Chamber of Commerce and Industry, the Islamic Chamber is an affiliated organ of the Organization of Islamic Conference (OIC) and represents the private sector of 57 member countries.

ICDT: Islamic Centre for the Development of Trade

IDB: Islamic Development Bank, the purpose of the Bank is to foster the economic development and social progress of OIC member countries and Muslim communities individually as well as jointly in accordance with the principles of Sharia (Islamic Law).

IFSB: Islamic Financial Services Board.

IHI: The International Halal Integrity Alliance.

 

IICRA: The International Islamic Centre for Reconciliation and Arbitration.

IICC: Irish Islamic Chamber of Commerce.

IIFM: International Islamic Financial Market.

IIRA: Islamic International Rating Agency.

Ijara: Leasing.

ITFC: International Islamic Trade & Finance Corporation.

IRTI: Islamic Research and Training Institute.

Islamic Banking: A banking system that is based on the principles of Islamic law (also known as Sharia or Sharia Compliant). Two basic principles behind Islamic banking are the sharing of profit and loss and, significantly, the prohibition of both the collection and payment of usury (interest).

Islamic Economy: An economic order that conforms to Islamic standards and traditions, in the economic world Islamic Economy consists of several codes for economic & financial practices such as: Islamic Taxation, Islamic Banking, Islamic Insurance, interest-free or usury free, and conventional tax free economy.

Islamic Finance: Financial practices based on Islamic law (Sharia Compliant).

Islamic Investment Fund: An investment fund strictly invested in conformity with Islamic Law or Sharia, this includes: Investment in Stock Exchange Market, Commodity Market, Ijara Fund, and other Mixed Islamic Investments.

Livestock ZAKAT: ZAKAT payable on livestock.

Lunar Year: It is widely used calendar in Muslim world also known as Hijri calendar; it is based on the motion of the moon and consists of 354 days divided into 12 months. 

Mudaraba ( or Venture Capital): Mudarabah is a special kind of partnership where one partner provides the capital to the other for investment in a commercial enterprise in return to certain percentage of profit.

Murabaha: This concept refers to the sale of goods at a price, which includes a profit margin agreed in advance between two parties. This method is widely used as Islamic/Sharia Compliant Mortgage.

Musharaka (Joint Venture): This is an agreement between two or more partners, whereby each partner provides fund to be used in a venture. Profits & Loss are shared between the partners according to the invested capital.

Diminishing Musharaka: Another form of Musharaka developed in recent years. According to this concept, financier and his client participate either in the joint ownership of a property or equipment, or in joint venture. The share of the financier is further divided into number of units and it is understood that the client will purchase the units of the financier one by one periodically.

OIC: The Organization of the Islamic Cooperation (Or Conference previously) is an international organization represents and official umbrella for 57 Member states. The organization attempts to be the collective voice of the Muslim world and attempts to safeguard the interests and ensure the progress and well-being of Muslims.

Nisaab (Limit): In English means the Limit, Nisaab is the minimum amount of wealth subject to ZAKAT, and it varies depend on ZAKAT category.

Personal ZAKAT: ZAKAT applied on individuals and it is 2.5% on net worth payable every lunar year.

PLS: Profit-and-Loss Sharing     

Qard: Loan

Retakaful (Reinsurance): A form of Islamic reinsurance that operates on the Takaful model.

IIBI: Institute of Islamic Banking & Insurance.

Riba (Usury): Usury or currently known as interest charged on lending, borrowing or paid on deposit account, it is a prohibited practice in Islam whether it is simple or compound interest.

Rikaz ZAKAT: ZAKAT imposed on all kinds of extracted treasures underground like Oil, Gold, Coal, Gas, and its rate is 20% of the market value.

Salam (Forward Contract): A contract in which advance payment is made for goods to be delivered later.

SESRIC: Statistical, Economic and Social Research and Training Centre for Islamic Countries

 

Sharia: Islamic Law.

Sharia Compliant: A Term used in Islamic finance to denote that a financial product, service or activity complies with the principles of the Sharia (Islamic Law).

SMIIC: Standards and Metrology Institute of the Islamic Countries

SUKUK (Islamic Bonds): Asset-backed securities, where SUKUK investors receive a fixed percentage of the annual profit instead of fixed or variable interest regardless of dividend policy of the firm. Different to bonds, SUKUK listed in companies assets in the balance sheet.

TAKAFUL (Islamic Insurance): In other words co-operative insurance society where members pay premiums to co-operative fund in order to guarantee each other against loss or damage, Takaful usually use this fund in Sharia compliant investments, hence members of this society share the loss and profit.

Tawarruq: It involves buying an item on credit and selling the item on spot to get cash.

Wakala: An agency contract.

Waqf or Wakf: A religious foundation set up for the benefit of Muslims.

ZAKAT Basis of Assessment: The six main elements involved in ZAKAT accountancy: 1. ZAKAT Category 2. ZAKAT Subcategory 3. ZAKAT Rate 4. Haul 5. Nisaab              6. Assessment Considerations.

ZAKAT Category: Category or class of wealth, asset and other item subject to ZAKAT.

ZAKAT Deductible: Similar to tax deductible it is an item or expense subtracted from the net worth or other ZAKAT category to reduce total ZAKAT liability.

ZAKAT Liability: Total amount of ZAKAT that individual or entity is obliged to pay.

ZAKAT Payable: The amount of ZAKAT a person or a company has to pay, in accounting criteria amount of ZAKAT payable cannot be included in company’s liabilities, whereas tax payable listed as liability.

ZAKAT Rate: Rate of ZAKAT applied in specific ZAKAT category.

ZAKAT Subcategory: Kind or type of wealth, or item fall under certain ZAKAT category.

ZAKAT: Verbally means growth and purification of money, it is the third pillar of Islam (among five pillars); in business and economics it is amount of payable money or equivalent value on different type of person’s or organization’s wealth. The Value varies depend on the type of wealth but in most common cases equal 2.5% of the ZAKATABLE wealth or item.

ZAKATABLE: An asset or other element subject to ZAKAT.