Because of the nature of these Islamic financial intruments, there is concern that sukuk will suffer from double taxation in Hong Kong under current rules, but the Treasury and Financial Services Bureau has indicated that a fix would be put in place in time for the issuing of the territory's first sukuk, by the government-owned Airport Authority, in October.

The double taxation of certain Islamic investments arises because the concept of interest is deemed unethical under principles of Shariah law, which governs Islamic finance. As a consequence, intermediaries often have to buy financial products and sell them on to the borrower at a higher price to recognise a profit.

In the case of Hong Kong sukuks, it is feared that the intruments will be liable for stamp duty twice. However, the city's tax authorities have resolved to examine each case on its merits, and assured that the double tax issue will be resolved in the next three months.

Hong Kong is very keen to develop a competitive edge in the field of Islamic finance, cognizant of the fact that there is a huge untapped demand for Islamic investments from citizens in the Islamic states in the Far and Middle East. On Tuesday, the territory's Securities and Futures Commission (SFC), Martin Wheatley, told a forum on Islamic finance held in Malaysia that Hong Kong has the strengths and capabilities to develop its Islamic finance sector and contribute to the growth of the global Islamic finance market.