The state is lining up double tax agreements with several wealthy Arab states, including the United Arab Emirates, Kuwait and Saudi Arabia, in a bid to expand wholesale Islamic finance activity in the IFSC and to attract sovereign wealth funds administration to Ireland, the Department of Finance has confirmed. An agreement has already been reached with Bahrain.

The negotiations are meant to complement changes made to the finance bill last week to extend the tax treatment applicable to conventional finance transactions to Islamic finance.

The Department of Fin­ance hopes the moves will help the IFSC expand its 5% share of the multibillion euro Islamic finance market by making it easier to move capital between Ireland and the Persian Gulf states.

"The finance bill changes are another sign of the positive actions being taken to improve Ireland's attractiveness as a location for international finance services," said Ken Owens, partner, Islamic Fin­ance, PwC Ireland. "A core building block of this is double tax agreements and the Department of Finance and Revenue have been working hard to expand the list, including the Gulf States."