Revenue amendment to boost use of “sukuk” bonds

Change went into effect on July 19.

Hong Kong’s Inland Revenue and Stamp Duty Legislation (Alternative Bond Schemes) (Amendment) Ordinance 2013 (the Amendment Ordinance) seeks to amend the Inland Revenue Ordinance and Stamp Duty Ordinance to provide a comparable taxation framework for some common types of Islamic bonds (sukuk) vis-a-vis conventional bonds. Its aim is the development of a sukuk market in Hong Kong.

Secretary for Financial Services and the Treasury, Professor K C Chan noted that the Amendment Ordinance represents the joint efforts of the Government and the market to remove a previous impediment to developing a sukuk market in Hong Kong.

"This will help 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, and consolidating Hong Kong's status as an international financial centre and asset management centre," Chan said.

The tax measures contained in the Amendment Ordinance will apply to qualified sukuk issued, and the relevant instruments executed, on or after July 19.

The Inland Revenue Department will publish the related Departmental Interpretation and Practice Notes and Stamp Office Interpretation and Practice Notes shortly to provide implementing guidance.