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Clifford Chance

Clifford Chance


Islamic Finance - Japanese law reforms

12 December 2011

A recent amendment to the Japanese laws will facilitate Shari'a-compliant financing structures within Japan. Historically, it had been difficult to structure Shari'a-compliant financing structures in Japan due to a number of factors, including the tax treatment of the distribution of profits to overseas Islamic investors. However, a recent amendment to the Japanese Asset Securitisation Law together with certain tax reforms have made investing in Japan in a Shari'a-compliant manner more attractive and have helped to level the playing field between conventional financing and Islamic financing for such investments in Japan. These amendments came into effect on 24 November 2011.

This client briefing re-visits the basics of the sukuk and sukuk-al-ijara and discusses the consequences of the latest legislative amendments for the development of Islamic finance in Japan.

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