Luxembourg’s parliament has approved a bill that would pave the way for the government to issue its first Islamic bond later this year.
The bill will allow Luxembourg to securitize three government assets to issue a 200 million ($275 million) sukuk that will boost the country’s Islamic finance credentials to attract more business from cash-rich Gulf countries, according to Reuters.
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A parliament spokesperson said that the law was adopted with 55 votes in favor and 5 against.
In June 2014, Luxembourg government has presented a revised bill to the Council of State to handle issues such as the economic rationale for using sukuk instead of conventional bonds and a need for greater clarity on its tax treatment.
Guy Arendt, a member of Luxembourg’s legislature, the Chamber of Deputies, said: "The issuance of the sukuk will be done later this year."
Unlike Britain, Luxembourg has not mandated any banks to arrange a sukuk and also does not have a domestic Islamic banking industry.
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By GlobalDataAdditionally, a new Islamic bank called Eurisbank is set to launch its operations in Luxembourg, a according to Reuters.
"The license process is still in progress, but significant advances have been made and it should be finalized in the next few weeks. Capital is firmed up, first semester next year seems very realistic," Arendt added.
