PRESS RELEASE

(Source : Information Services Department)

Government releases consultation conclusions for tax law
amendments for Islamic bonds

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       The Government today (October 29) released the consultation conclusions on proposed amendments to the Inland Revenue Ordinance and the Stamp Duty Ordinance to provide a taxation framework for Islamic bonds (sukuk) on par with that for conventional bonds, with a view to promoting Islamic finance development in Hong Kong.

       "Islamic finance is among the fastest growing segments in the international financial system. Globally speaking, Islamic finance assets have expanded from US$150 billion in the mid-1990s to US$1.3 trillion in 2011. Sukuk are one of the most prominent instruments used in Islamic finance, and have been commonly issued for raising funds in the domestic and international capital markets," a spokesman for the Financial Services and the Treasury Bureau said.

       "Given our role as a leading international financial centre and China's global financial centre, Hong Kong has the advantage of matching the needs of fund raisers and investment demands of investors among China, the Middle East and other parts of the world interested in Islamic financial products," the spokesman added.

       "We believe enactment of these legislative amendments would help anchor more asset management activities in Hong Kong," he said.

       With reference to the current tax treatments which apply to conventional bonds, the proposed legislative amendments seek to remove additional profits or property tax liabilities or stamp duty charges arising from the inherent complexity of typical sukuk product structures.

       The Government received 15 responses from a broad range of interested stakeholders to the consultation exercise which ended in May 2012.

       A large majority of respondents welcomed the legislative proposals, with a view to enhancing Hong Kong's competitiveness in financial services and enabling Hong Kong to perform as a gateway for international Islamic finance.

       The Government has taken on board many useful suggestions and comments from respondents, regarding the coverage, features and qualifying conditions for sukuk products eligible for the proposed tax treatment, as well as relevant tax administration matters.

       The Government is finalising a bill with a view to introducing it to the Legislative Council in early 2013.

       The consultation conclusions are published on the website of the Financial Services and the Treasury Bureau (www.fstb.gov.hk/fsb).

Ends/Monday, October 29, 2012
Issued at HKT 16:12

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