Unfriendly tax laws stunt sukuk growth

Taxation is one of the critical areas that can hinder the progress of Islamic finance and this needs to change, says Malaysia’s RAM Ratings.

The implementation of friendly tax legislation and initiatives for sukuk is vital for the growth of Islamic finance but some countries still lag in this regard, according to Malaysia’s RAM Ratings.

This is either due to the complexity of legal documentation or lack of comprehension for sukuk instruments and structures, highlights the rating agency in a report released on March 10.

However, the eagerness shown by various countries including Japan in terms of attracting more investments and liquidity bodes well for the global Islamic finance market, according to RAM.

“The introduction of more tax incentives and the decision to abolish tax would add...

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