Hong Kong plans tax cuts for asset managers, FT reports
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Hong Kong is preparing to expand its carried interest tax concession, allowing asset managers to enjoy tax-free treatment on performance fees derived from a far wider array of investments. The change, expected to go before the Legislative Council in the near term, would lift the current restriction that limits the preferential regime to private equity transactions.
Carried interest—the portion of a fund manager’s compensation tied to investment profits—has long occupied a sensitive space in global tax policy. In Hong Kong, the government now seeks to broaden that space in an effort to sharpen the city’s competitive edge as a regional asset management hub. A spokesperson for the Financial Services and the Treasury Bureau told the Financial Times that the amendment is scheduled for introduction by the middle of 2026. The official added, however, that bonuses and payments linked to general service “would remain taxable at the normal profits tax rate”, underscoring the targeted nature of the proposed relief.
The initiative comes at a moment when Hong Kong’s capital markets face shifting currents. Mainland authorities have tightened the rules governing offshore listings by red‑chip companies—a category of firms incorporated outside China but with mainland roots—even as Hong Kong crowned itself the world’s top initial public offering destination last year. The proposed tax change can thus be read as part of a broader effort to reinforce the city’s allure as a premier wealth management centre.
Whether the bill will pass as expected remains to be seen; the Financial Services and the Treasury Bureau did not immediately respond to a request for comment from Reuters. But the direction is clear: in a competitive landscape where asset managers are increasingly sensitive to tax treatment, Hong Kong is moving to offer a more expansive—and carefully calibrated—incentive.
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