Bill to develop Islamic bonds gazetted
December 28, 2012
The Inland Revenue & Stamp Duty Legislation (Alternative Bond Schemes) (Amendment) Bill 2012 was gazetted today and will be tabled at the Legislative Council on January 9.
The bill amends the Inland Revenue Ordinance and the Stamp Duty Ordinance to provide a taxation framework for some common types of Islamic bonds (sukuk) on par with that for conventional bonds.
"The bill will remove an impediment perceived by the market to developing a sukuk market in Hong Kong. Given our role as a leading international financial centre, Hong Kong has the advantage of matching the needs of fund raisers and the investment demand of investors among China, the Middle East and other parts of the world interested in Islamic financial products," Secretary for Financial Services & the Treasury Prof KC Chan said.
The proposed amendments will provide for tax and stamp duty relief for transactions underpinning issuance of relevant Islamic bond products, as these transactions would normally not have existed in a comparable conventional bond structure of similar economic substance.
"The bill, if passed, will improve the competitiveness of Hong Kong, as it will provide for a conducive platform to enable the development of Islamic finance in Hong Kong. This will contribute to the asset management business of Hong Kong by diversifying the types of products and services available to our financial markets."
Islamic finance is amongst the fastest growing segments in the international financial system, with a presence in both Muslim and non-Muslim communities. Globally speaking, Islamic finance assets have expanded from US$150 billion in the mid-1990s to US$1.3 trillion in 2011.