Hong Kong tipped to approve hedge fund tax breaks, attracting investment, talent Hong Kong’s determination to boost its role as a global wealth management hub has raised market expectation that the city will approve a bill offering tax relief to hedge funds within this year. Speaking at a media briefing on Tuesday, Sandy Fung, KPMG China’s partner of tax and alternative investments, said the bill would be passed “soon” by the Legislative Council (LegCo), the city’s lawmaking body. “The bill could attract lots of funds and related talent to settle in Hong Kong, further cementing the city’s status as a global asset management centre,” Fung said. If passed, the bill will exempt private equity fund companies and venture capital funds from paying tax on performance-linked income and salary tax on fund managers’ performance-linked bonuses starting from April 2025, as long as they meet certain requirements. The drafted law, titled the Inland Revenue (Amendment) (Preferential Tax Regimes for Funds, Family-owned Investment Holding Vehicles and Carried Interest) Bill 2026, was gazetted in mid-June and was moved to the second reading in the LegCo on June 24. It would make Hong Kong the first global city to offer accurate and detailed rules for tax break on carried interests and performance-linked income to funds and their managers, which KPMG’s Fung described as “an unprecedented and revolutionary improvement”. Currently in the city, individuals face salaries tax capped at a standard rate of 15 per cent, while companies pay corporate profits tax at 16.5 per cent. After the proposal details were announced, KPMG received a large number of inquiries from overseas funds about the possibility of settling in or returning to Hong Kong, Fung told the Tuesday briefing. She also said the government would have a “reporting notification” to gauge the interests of funds outside Hong Kong, collecting information including their investment strategy and fund sizes to update the measures. Besides the international funds, the proposed tax break also attracted fund managers from mainland China aiming at overseas expansion, Fung added. Amid the efforts of the Hong Kong government, assets and wealth under management in the city surged to a record high of HK$42.2 trillion (US$5.4 trillion) last year, according to a report by the Securities and Futures Commission in early July. Hong Kong also overtook Switzerland to become the world’s top cross-border wealth hub last year, a May report from Boston Consulting Group showed. https://www.scmp.com/business/banking-finance/article/3361401/hong-kong-tipped-approve-hedge-fund-tax-breaks-attracting-investment-talent?pgtype=live (ICE HONG KONG)

Fonte notizia: South China Morning Post