Hong Kong government reiterates support for Islamic finance (By IFN)

Hong Kong government reiterates support for Islamic finance

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HONG KONG: Secretary for Financial Services and the Treasury, Professor K C Chan has reiterated the government’s support for the upcoming bill allowing for Sukuk in the country. The second reading in the Legislative Council of the bill to give tax and stamp duty relief for Sukuk has been moved, following the proposed tax rules by the Financial Services Branch of the Financial Services and the Treasury Bureau of Hong Kong which was released on the 31st October 2012. The amendments, which were documented in a 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 allow for tax and stamp duty changes as well as tax and bond income to allow a level playing field for profit and coupon payments for Sukuk. Chan stressed that the proposed legislation will ensure that Sukuk, classified under ‘Alternative Bonds’ (ABS) will be economically equivalent to a typical conventional bond structure and eligible for the proposed tax treatments, and also to ensure that reasonable safeguards are put in place to minimize tax avoidance. The bill also provides for certainty of the tax position of relevant bond and investment arrangements under an ABS. The bill will also allow for the facilitation of Hong Kong-based assets in a Sukuk issuance.