Hong Kong takes a major step in advancing Islamic financing.
The government is finalising a bill that will provide a taxation framework for Islamic bonds, or sukuk, that it hopes to introduce to the Legislative Council in early 2013.
The Financial Services & the Treasury Bureau has released results of consultations on proposed amendments to the Inland Revenue Ordinance and the Stamp Duty Ordinance that aim to promote Islamic finance’s development in Hong Kong. The consultations will provide a taxation framework for sukuk on par with that for conventional bonds.
The government received 15 responses from a broad range of interested stakeholders during the consultation exercise that ended in May. It has taken into account their suggestions and comments regarding the coverage, features and qualifying conditions for sukuk products eligible for the proposed tax treatment, and relevant tax administration matters.
The majority of respondents welcomed the legislative proposals, seen as enhancing Hong Kong's competitiveness in financial services and enabling the city to serve as a gateway for international Islamic finance.
Islamic financial assets have expanded from US$150 billion in the mid-1990s to US$1.3 trillion in 2011 globally. Sukuk are one of the most prominent instruments used in Islamic finance, and have been commonly issued for raising funds in domestic and international capital markets.
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