Jihad Tax

I recently had the opportunity to attend a seminar on foreign investment in Libya, which has spent this year making great efforts to attract overseas investment in its oil fields. American, Japanese, and French countries are winning the largest number of concession agreements in recent bids, but there is much left to be explored. And investment in Libya has become simplified and more profitable due to the recent enactment of the new Investment Law, liberalizing regulations on stock ownership, wages, employee citizenship requirements, and reducing taxes (the top income rate has been dropped from 90% to 35%). But one item remains unchanged: the Jihad Tax, a flat 4% tax on all corporate profits and a 3% tax on high-wage individuals.

Just what is this so-called Jihad Tax? It was founded in the 1970s to aid the Palestinians in their struggle against Israel. More recently, the fund has been used to build Islamic universities and proselytize. The use of the proceeds today are unclear. The US-Libya Business Association, which has a clear interest in calming any worries over the tax, has stated: “It is unclear to USLO where the proceeds of this tax flow, but in light of Libyan policy, one can be reasonably certain this tax is not used to subsidize Muslim fundamentalist organizations.”

I suppose I’m confident that’s correct. (If a country wanted to use taxes on oil to finance terrorist organizations, they probably wouldn’t be so obvious as to call it the “Jihad Tax,” the very existence of which causes raises eyebrows among western investors.) But considering its use in the past to blow up Israelis, one has to wonder where the money is going.

About Curzon

Lord George Nathaniel Curzon (1859 - 1925) entered the British House of Commons as a Conservative MP in 1886, where he served as undersecretary of India and Foreign Affairs. He was appointed Viceroy of India at the turn of the 20th century where he delineated the North West Frontier Province, ordered a military expedition to Tibet, and unsuccessfully tried to partition the province of Bengal during his six-year tenure. Curzon served as Leader of the House of Lords in Prime Minister Lloyd George's War Cabinet and became Foreign Secretary in January 1919, where his most famous act was the drawing of the Curzon Line between a new Polish state and Russia. His publications include Russia in Central Asia (1889) and Persia and the Persian Question (1892). In real life, "Curzon" is a US citizen from the East Coast who has been a financial analyst, freelance translator, and university professor; he is currently on assignment in Tokyo.
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5 Responses to Jihad Tax

  1. Libya is in a strange situation with its legal system too. It seems determined to find five Bulgarian nurses and a Palestinian doctor guilty of deliberately infecting 426 children with HIV, and executing them. It is much more likely that the infections were caused by faulty hygiene… sad but not culpable at the level of these employees. At present the court is refusing to accept expert scientific witnesses…
    Libya will remain somewhat of a pariah state until it recognizes that local populism has international consequences…

  2. a517dogg says:

    Doesn’t Saudi Arabia have a similar tax? I think it might not be statutory, more of an expectation on companies to donate 2.5% (if I remember right) to Islamic charities, etc.

  3. adamu says:

    If you’re interested in doing business with north Africa, maybe consider Sudan? There’s a seminar being held soon at “their embassy in Tokyo”:http://j-net21.smrj.go.jp/headline/event/023028.shtml

  4. Mutantfrog says:

    Adam, are you serious? The same Sudan that is committing genocide?

  5. adamu says:

    Well I’m serious enough about there being a seminar. I won’t be investing.