South Korea plans to amend laws to help local companies issue Islamic bonds, finance ministry officials said on Friday. Islamic bonds, or sukuk, do not pay interest and are underpinned by tangible assets. South Korea's tax laws recognise interest that bond issuers pay to investors as companies' costs and give tax incentives for the interest, a finance ministry official said.
Instead of interest, Sukuk issuers pay fees to investors which are not recognised as companies' costs in South Korea, the official said. "We will seek amendment to recognise the fees as companies' costs," he said, asking not to be identified as he was not authorised to speak to the press. But he did not give any time frame for the amendment. Another official said some domestic companies were looking to issue Islamic bonds.
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