Hong Kong Introduces Fund Management Tax Incentives

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Mar. 1 – The Hong Kong government has introduced measures in its new 2013 budget aimed at promoting the development of the city as an international asset management center. Wanting to attract more overseas fund managers to the territory, Financial Secretary John Tsang said the government would introduce changes to the law to extend tax exemptions on profits realized from offshore funds in overseas private companies that do not own property or assets in Hong Kong.

Hong Kong last revised its tax code in this area in 2006, when it exempted offshore funds from paying tax if they did no business in Hong Kong other than qualifying stock or futures transactions. This brought the city onto a parallel with New York and London, however did not extend the exemption to offshore private equity funds. That is now being amended.

Tsang also revealed that the industry would be asked for opinions on restructuring other areas of investment law, including the potential introduction of an “open-ended investment company.”

The Hong Kong government is also in talks with its mainland counterparts to establish mutual recognition to allow Hong Kong registered funds to be sold on the mainland and vice versa.

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