The Financial Services and the Treasury Bureau presented feedback last year on the consultation on proposed amendments to the Inland Revenue Ordinance and the Stamp Duty Ordinance to ease development of an Islamic bond, or sukuk, market in Hong Kong.
As part of the Hong Kong government's long-standing policy initiative to develop Islamic finance in the city, the bureau sent out a consultation paper with detailed proposals for the amendment of relevant tax-related legislation. The essence of the proposal is that a level playing field needs to be created to enable Islamic finance products to be structured in Hong Kong.
It has been reported that Hong Kong's bill to facilitate the issuance of sukuk, or Islamic bonds, is expected to be ready early next year but initially at least, it may attract little interest among issuers.
In March, the government asked for industry feedback on the subject and this month, it said it aimed to introduce a bill in early 2013.
Syed Alwi bin Mohamed Sultan, the Kuala Lumpur-based head of Islamic banking for Asia Pacific at BNP Paribas Malaysia Bhd., discusses the trends in Islamic finance at the World Islamic Banking Conference in Singapore.
“There’s greater diversification of the investor base. What we have seen from recent issuance is that there are greater non-Islamic investors coming in to accept sukuk or invest in sukuk instruments. The Khazanah Nasional Dim Sum sukuk witnessed more than 50 percent from Singapore and Hong Kong investors.
The Financial Services & the Treasury Bureau (FSTB) launched a consultation on 29 March 2012 on the proposed amendments to the Inland Revenue Ordinance and Stamp Duty Ordinance to promote Islamic bond, market development in Hong Kong SAR.
Secretary for Financial Services & the Treasury Professor KC Chan said the amendments seek to level the playing field for common types of Sukuk (Ijarah, Musharaka, Mudaraba and Murabaha) vis-a-vis their conventional counterparts in terms of profits tax, property tax and stamp duty liabilities.
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