The Role of Sukuk in Islamic Capital Markets
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Country Tax Changes
United
Kingdom
 Alternate Finance Investment Bond (AFIB) introduced by Finance Act of 2007
deemed sukuk as 'securities' for tax purposes and eliminating VAT and stamp
duty on transfer of certificates
Turkey  In 2011, Turkish Law No.6111 was issued to provide tax exemption or
favourable tax treatment for sukuk, reducing the withholding tax on sukuk
and introduced tax neutrality on ijarah sukuk issuance
 In 2016, the other sukuk structures namely wakalah, murabahah, mudarabah
and istisna’ were granted tax neutrality with a law amending the Stamp Tax
Law, VAT Law and Law on Charges.
Indonesia  Withholding tax on interest payments for government securities, including
sukuk, was removed
 In 2016, the Financial Services Authority (Otoritas Jasa Keuangan (OJK))
provides lower registration fees for corporate sukuk issuances
Source: Compiled from various resources by ISRA and RAM.
2.6.3 SUPERVISORY
The role of an effective supervisory framework is to ensure discipline, control and minimum
standards of prudential conduct, among others. The regulatory and supervisory framework
encompasses the various frameworks put in place by the regulatory authorities in their
respective jurisdictions to deal with specific areas: licensing of capital market intermediaries;
requirements for acceptable market conduct; Shariah compliance requirements; registration of
Shariah advisers; disclosure, corporate governance and transparency requirements; and
establishment of robust infrastructure such as stock and commodity exchanges. These
frameworks are usually established through the collaboration of different bodies and agencies,
such as government authorities, regulators, exchange authorities, and industry associations.
They can take the form of specific guidelines issued to fulfill certain purposes. For instance, the
requirements set out under the LOLA Framework (June 2015) by the SC include the following:
 Lodgement requirements.
 Requirements for the invitation, offering, subscription, purchase and issuance of
sukuk.
 Ringgit and FCY sukuk.
 SRI sukuk.
 Credit rating requirements and exemptions.
 Details of the approved Shariah primary and supplementary principles and concepts.
 Transferability and tradability, programme issuances, utilization of proceeds and
Shariah advisers.