Hong Kong to take non-religious approach to Islamic finance (By IFN)

HONG KONG: The Financial Services Branch of the Financial Services and the Treasury Bureau of Hong Kong has just issued its response to the Sukuk consultation paper issued in March 2012, indicating the republic’s interest in exploring the utilization of Hong Kong-based assets to underpin Sukuk issuances. The bureau had received 15 responses from a broad range of stakeholders, including the law society of Hong Kong, tax experts, lawyers and banks.

The paper, entitled: “Proposed Amendments to the Inland Revenue Ordinance (Cap.112) and the Stamp Duty Ordinance (Cap.117) to Facilitate Development of an Islamic Bond Market in Hong Kong” will primarily allow the facilitation of Hong Kong-based assets in a Sukuk issuance, via tax and stamp duty changes, as well as tax bond income which will ensure a level playing field for interest and coupon payments made under Sukuk.

Taking a page out of the UK’s approach to Islamic finance, the Hong Kong Treasury Bureau has opted to take a non-religion specific view on the proposed legal changes. Speaking exclusively to Islamic Finance news, Davide Barzilai, partner at Norton Rose revealed: “The key ethos is to create legal changes that are non-religion specific. Although they help Islamic finance, they are not going to include any Shariah terms or Arabic words. They are looking to adapt tax rules in a neutral way; the same way the UK have done it. For example, the word Sukuk will not be used in the legislation, but instead the term ‘alternative bond’ will be used— similar to the UK.”

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