Hong Kong Tax Exemption Should Boost Hedge Funds
Thursday, June 6, 2013
In a media interview, Philip Tye, Chairman of the Hong Kong branch of the Alternative
Investment Management Association, which represents the hedge fund industry,
confirmed that the extended tax exemption proposed in his last Budget by Financial
Secretary John Tsang should strengthen Hong Kong's position as an international
asset management center.
In an article on the website of the South China Morning Post, Tye said that
"the proposed reform plans would now make Hong Kong more attractive for
fund companies to domicile their funds here. This will create job opportunities
and benefit the hedge fund industry as a whole."
To attract more private equity funds in Hong Kong, Tsang's proposal is
to extend the profits tax exemption for offshore funds to include transactions
directly in private companies that are incorporated or registered outside Hong
Kong (for example in Mainland China) and do not hold any Hong Kong properties
nor carry out any business in Hong Kong. That would allow private equity funds
to enjoy the same tax exemption as offshore funds.
In addition, while, at present, investment funds established in Hong Kong can
only take the form of trusts, the Government is considering legislative amendments
to introduce the open-ended investment company into Hong Kong. That should also
encourage more traditional mutual funds and hedge funds to domicile in Hong