Taxation regime for sukuk specific to countries dominating the sukuk market

Religion is not just a system of rules limited to belief and worship. Islam, like other religions, contains provisions for different areas of life. One of these areas is finance. The Islamic finance system, which is basically based on the prohibition of interest, has made significant progress from the past to the present. The main reasons such as the increase in the Muslim population, the increase in Islamic awareness, the improvement in the income level of Muslims, and the desire of Muslims to integrate into the financial system have supported the development of Islamic finance. Along with the interest in Islamic finance, new financing sources have started to emerge. One of these sources is sukuk, which is called interest-free bonds. Being a relatively new financial instrument, sukuk has made significant progress in being an alternative instrument to conventional financial instruments. Today, this instrument which has started to be traded on international stock exchanges as well as in regions with a high Muslim population is becoming more and more widespread. However, despite this development in the sukuk market, it is known that many countries are still insufficient in establishing the legal framework for sukuk. In particular, due to its unique structure, the regulations regarding subjecting sukuk to a different taxation regime from other financial instruments are insufficient. The focus of this study is to analyse the developments in the taxation regime for the sukuk market. In this context, the legal framework and taxation regimes in the leading countries in the sukuk market were analysed and comparisons were made between Turkey and other countries. As a result of the study, the neutral taxation regime adopted by Turkey in terms of sukuk has been evaluated positively. However, it has been suggested that different incentive policies be established for sukuk than for traditional bonds.