Morocco hopes regulation will aid second Islamic finance drive

Morocco is set to give Islamic finance a second try, counting on closer regulation and a clearer legislative framework to resolve problems which plagued its first attempt in 2007. Morocco’s parliament is considering a detailed bill that would regulate Islamic banks and issues of sukuk, and its passage – which could occur this year – is expected to prompt some Moroccan banks to establish dedicated sharia-compliant subsidiaries. Meanwhile, Morocco’s central bank plans to set up a central sharia board to oversee the sector. In its current form, the proposed legislation appears to address the tax issue well. It provides for the use of special purpose vehicles (SPVs), while transfers of real estate between sukuk originators and SPVs would not face double taxation.