How the Khilafah will promote Business?

I.  LOW TAXATION FOR ENTERPRISE

 The Shari'ah removes anti‐business taxes such as corporation tax, so that entrepreneurs are encouraged to spend and invest excess funds by expanding their business and creating employment. Just like any other citizen business owners will have to spend or invest their profits or face zakat tax and potential hoarding penalties.

II.  BUILDING VITAL INFRASTRUCTURE FOR BUSINESS

There will be a public works programme to build adequate infrastructure in energy, transport and communications in order to develop a thriving economy. This type of infrastructure is the lifeblood of the nation and the delivery here needs to be on a timescale of years not decades.

III.  THE VIBRANT REAL ECONOMY AGAINST A FALSE FINANCIAL ECONOMY 

The Shari'ah recognizes that investment money should go to businesses for commerce rather than going to banks to earn risk free interest or invested in complex financial instruments that are vehicles for interest (riba). Consequently the banking and financial sector will be immediately required to close interest debt and speculation based activity, and transform their business models to focus on a venture capital and consultancy based model of channeling investor funds. Given the innovations in Shari'ah compliant financial products, this transformation is well within the capabilities of the financial sector.

The treasury will deal with bank clearing activities however the private sector may also participate.

The overall effect will be that excess earned wealth will be channeled straight back into businesses.

IV.  TARGETED GOVERNMENT GRANTS

 Government grants will be directed preferentially to those sections of the private sector that can assist with the development of strategic industry such as defence, machine tools, infrastructure, energy and agriculture.

V.  RESPONSIBLE PROFIT SHARING COMPANY STRUCTURES

 The Shari'ah encourages a multiplicity of profit sharing partnerships (mudharaba/inan/abdan/mufawaddah) which share and handle risk responsibly. This is in contrast with Capitalist limited liability structures which allow the owners of businesses to take irresponsible risks whilst being able to walk away from the consequences. This violates their obligations to ‐ and causes immense financial difficulty for ‐ creditors, customers and employees. 

Companies will be immediately required to transform their company shareholding structures into Islamic ones and will be assisted in doing so.