HKSAR Government Proposes Preferential Tax Regime Enhancements for Funds, FIHVs and Carried Interest
On March 2, the Secretary for Financial Services and the Treasury, Mr Christopher Hui, briefed the Legislative Council Panel on Financial Affairs on the Government’s proposed preferential tax regime arrangements to enhance the regimes for funds, family-owned investment holding vehicles (FIHVs) and carried interest.
Key measures include:
- Expanding the definition of “fund” to cover retirement funds, endowment funds and certain single-investor funds;
- Broadening eligible asset classes to include overseas real estate, carbon credits and derivatives, insurance-linked securities, private credit, digital assets, precious metals and selected commodities;
- Removing the 5% incidental transaction threshold;
- Granting full profits tax exemption to special purpose entities regardless of ownership percentage (subject to anti-avoidance rules);
- Refining anti-avoidance provisions; and
- Easing carried interest concession requirements.
Minimum substance requirements and a reporting mechanism will be introduced. Subject to passage of the amendment bill, the measures are targeted to take effect from the 2025/26 year of assessment.
