Hong Kong tax laws come under review

By Habhajan Singh
A review of tax laws is currently underway in Hong Kong to facilitate the launch of more Shariah-compliant products and put in place a level playing field for sukuk vis-a-vis conventional bonds, said a top executive.
"Islamic finance is a natural extension of our role as a global financial centre. We possess the necessary credentials, such as a transparent regulatory regime, a sound financial infrastructure and a large pool of professionals to make it work," said Hong Kong chief executive Donald Tsang at the opening of the Asian Financial Forum on Monday.
In a copy of his speech received in Kuala Lumpur, the Hong Kong leader noted that Islamic finance is an "exciting area for us" and it is making good progress in establishing a platform for Islamic finance. The financial jurisdiction has made known its intention to become an international hub for the fast-growing sector, joining the likes of Kuala Lumpur, Dubai and Singapore.
Apart from tax related issues, an international Islamic finance conference in Kuala Lumpur last November highlighted the fact that there is concern in Hong Kong in relation to the cost of retaining a Shariah scholar and also the cost of a regular compliance.
Amirali Nasir, a Hong Kong based lawyer who took part in the Second Global Islamic Finance Conference (GIFC) 2008, had said that another jurisprudence challenge facing the sector in Hong Kong is the perception that Shariah is a single code, which is interpreted and accepted consistently by all Muslims.
Delegates are confused when they hear about the various schools of law and the varying interpretations applied, the lawyer added.
In his latest speech, Tsang said his trip to the Middle East last year "to help promote Hong Kong's potential for Shariahcompliant products" has brought about a number of results, including the signing of an agreement with the Dubai International Financial Centre (DIFC) Authority and the Dubai Financial Services Authority (DFSA).
He added that Hong Kong has also seen the launch of a variety of Islamic financial products, such as the Islamic banking window and indexes, with an exchangeable sukuk now already listed on the local stock market.
(This story appeared in The Malaysian Reserve on Jan 19, 2009. The Malaysian Reserve is a daily business/finance newspaper published out of Kuala Lumpur, with a sectoral page on Islamic finance on Mondays edited by Habhajan Singh)