The government's Enterprise Investment Scheme (EIS) helps small trading companies raise finance by offering tax relief to investors.
The project has been vetted by Bahrain-based Islamic advisory firm Shariyah Review Bureau and will be managed by London-based Gardner Asset Management LLP, which is now seeking a suitable site for the solar farm in Britain.
Islamic finance has grown rapidly in its core markets in the Middle East and southeast Asia, but expansion elsewhere has been slow partly because asset transfers expose sharia-compliant structures to high taxation.
EIS could address this issue as it provides investors with income tax relief at 30 percent, capital gains tax exemption, loss relief and 100 percent inheritance tax relief.
Under the wakala structure used by the solar project, one party acts as agent (wakil) for another, charging an agency fee and a performance fee which mirrors the setup of a conventional solar EIS.
Revenues will be generated from government-backed renewables obligation certificates, which are tradable green certificates issued by the government to producers of renewable electricity, and from selling power generated by the solar farm, said Karbani.