Islamic bond to get tax waiver
<!– The government will waive certain taxes for Hong Kong’s first Islamic bond – probably issued by the Airport Authority – before any changes in the tax regime, said Secretary for Financial Services and the Treasury Ceajer Chan Ka-keung.
Tuesday, July 15, 2008
The government will waive certain taxes for Hong Kong’s first Islamic bond – probably issued by the Airport Authority – before any changes in the tax regime, said Secretary for Financial Services and the Treasury Ceajer Chan Ka-keung.”There is still time to implement [permanent] changes to our tax regime relating to Islamic bonds issuance. So for now we will exempt certain taxes on [such notes] on a case-by-case basis,” Chan told a banking conference.
“Islamic products issuance will involve lots of asset transfers and increasing taxes. We would like to offer a platform of same tax base as other products helping Islamic finance development.”
Chan said the government is reviewing the ordinance, but has no timetable yet for its implementation.
Islamic bonds structured in accordance with Shariah or Islamic law differ from their conventional counterparts in that they don’t pay interest, which Muslims consider to be usury. Instead, lenders receive a regular payment linked to the performance of underlying tangible assets.
The Airport Authority said in April it planned to issue the city’s first Islamic bond to raise up to US$1 billion (HK$7.8 billion) in the third quarter. Chan said he has been in talks with the authority to have more understanding of their needs.
He said the Islamic sector is growing at a 50 percent annual rate with a total of US$700 billion worth of products being issued in the Asia region.
Chan agreed that concerns over the worsening US housing problems will affect global banking and economic systems, “but it was not unexpected.” He said the Hong Kong government will continue to monitor the situation before taking any measures to combat the deteriorating situation.
“We don’t need to adjust our GDP forecast yet,” he said.