Ijarah is a lease contract that is applied on investments financing, it is a mid to long term financing that complies with the rules and principles of Islamic Sharia. It has many features among them are:
1- It allows them to renew their old equipment and benefit from the latest developments in technology;
2- It helps them avoid freezing their money on the mid-term and long-term caused by acquisition either by self-financing or by investment financing, where in Ijarah the annual expenses are only limited to leasing during the period of Ijarah, which makes it preferred by the companies that are seeking more balance in maintaining their financial position.
Ijarah has become a very popular means of financing in recent years since it gives the customer tax advantages as the rent can be fully deducted from income or corporate profits and therefore could be offset against income / corporate taxes by the lessee..