Bangladesh Waives Off VAT on Sukuk as Requested by Bangladesh Bank and BSEC

In an attempt to make Sukuk more commonplace, the National Board of Revenue (NBR) in Bangladesh has put forward tax incentives for Sukuk. The Board's Value-Added Tax (VAT) wing has exempted taxes on asset sales and purchases between the originator and the Sukuk Special Purpose Vehicle (SPV). Through the issuance of a Statutory Regulatory Order (SRO), VAT on asset rent or leasing between them has also been eliminated.

Why it Matters?

Islamic banking is an estimated 35% market size of the total banking sector. According to media reports, a senior VAT official had remarked that the rate of VAT of 7.5-15% had been waived off in order to make Sukuk more popular. It was also noted that the Bangladesh Bank (BB) and Bangladesh Securities and Exchange Commission (...