Level playing tax field for Sukuk now in full effect - IFN

Level playing tax field for Sukuk now in full effect

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HONG KONG: The amendments to the bill on Inland Revenue and Stamp Duty for Alternative Bond Schemes in Hong Kong allowing for a level playing tax field for selected Sukuk structures have been gazetted and is in full effect as of today, the 19th July. Davide Barzilai, a partner at Norton Rose Fulbright in Hong Kong and who was among the committee of experts working on the draft amendments, confirmed to Islamic Finance news that the law which was enacted by the Hong Kong Legislative Council has come into force in a form that has been “widely anticipated”. The Amendment Ordinance, according to a statement on the government’s website, principally seeks to amend the Inland Revenue Ordinance and Stamp Duty Ordinance to provide a comparable taxation framework for common types of Sukuk vis a vis conventional bonds, as the republic aims to develop a Sukuk market in Hong Kong. The secretary for Financial Services and the Treasury, Professor K C Chan said: “This will remove a previous impediment to developing a Sukuk market in Hong Kong, and help to establish a conducive platform for the development of Islamic finance in Hong Kong, thereby diversifying the types of products and services available to our financial markets.” In October last year, the Financial Services Branch of the Financial Services and the Treasury Bureau of Hong Kong had proposed the necessary amendments to accommodate the issuance of Sukuk in Hong Kong, including the facilitation of Hong Kong-based assets for a Sukuk issuance originating from the republic. The amendments were documented in a paper entitled: “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”. The move is seen as a step in the right direction as Middle Eastern investors continue to express interest in the Asian market, and as the republic strives to maintain its edge as the region’s international asset management and financial center.