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Wednesday, 24 December 2014

Turkey's VakifBank eyes $300m loan for new Islamic bank

Turkey’s VakifBank’s board of directors has authorized a major loan procurement to set up an Islamic banking operation.
On Tuesday, the board confirmed that the bank’s general directorate office now has the authority to push ahead with the $300 million financing.
In early August deputy prime minister responsible from the economy, Ali Babacan said that the Turkish government wanted to see the establishment of three Islamic banks as subsidiaries of the current state-run conventional banks by the end of 2015.
VakifBank issued a statement on Tuesday: “On December 22, 2014 our Board of Directors licensed the general directorate office of our bank to procure a loan of $300 million under guarantee of treasury from the Islamic Development Bank (IDB) for the establishment of a participation bank.”
The Banking Regulation and Supervision Agency on 15 October issued a certificate giving permission to Ziraat Bank, the second largest in Turkey, to establish an Islamic operation with $300 million capital. Ziraat became the first state-run bank to open an Islamic branch.
(World Bulletin / 23 December 2014 )
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South Korea Preparing Islamic Finance Tax Rules

At a roundtable in Pyeongchang, the CEO of the Franco-American Alliance for Islamic Finance (FAAIF), Camille Paldi, noted that, while South Korea has taken many steps towards entering the global Islamic finance market, its tax code has yet to be amended to facilitate sukuk issuance.

She stressed that South Korea, which is one of the major exporters to Islamic nations, "is not only preparing to enter the Islamic financial market, [but also] strives to become a hub of Islamic finance in East Asia, in competition with Japan, Hong Kong, and Singapore."

However, Paldi said a remaining problem for the domestic South Korean market is that an amendment to the Special Tax Treatment Control Act (STTCA) has not yet been approved. The amendment would provide tax relief to sukuk. Complex structures have to be established to set up sukuk (often using special purpose vehicles and multiple asset transfers), as Shariah law forbids the payment or receipt of interest. Without tax breaks for sukuk, these arrangements may attract a higher tax burden compared with conventional securities.

"Local supporters of the introduction of Islamic finance products are confident that the delay [to the STTCA] is a minor setback," Paldi said, noting support from South Korea's Financial Supervisory Service and the central bank. "The Government is committed to facilitating them in South Korea," she said.

(Tax-News / 23 December 2014)
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