The Japanese Financial Services Agency has issued a document (see Taxation of J-Sukuk Q&A) highlighting reforms to Japanese tax laws implemented in 2011 that facilitate the issuance of sukuk by Japanese companies (J-Sukuk).

Following these reforms, distributions paid on J-Sukuk benefit from the same favourable withholding tax treatment as interest or coupons paid on corporate bonds issued by Japanese companies. In addition, if certain conditions are fulfilled, transfers and re-transfers of real estate that constitute the assets referenced in…