Hong Kong proposes tax exemptions on crypto gains, private credit, and carbon credits to attract elite investors.
By Chimamanda U. Martha
Edited by Julia Sakovich
Updated
3 mins read
Hong Kong is gearing up to boost its status as a global financial hub with a proposal to exempt hedge funds, private equity firms, and billionaire family offices from taxes on cryptocurrency gains and other investments. The move is part of a broader strategy to attract wealthy investors and asset managers by offering a competitive tax environment.
According to a Financial Times report, the potential tax break was revealed in a 20-page document, which the country’s lawmakers are currently reviewing for possible implementation.
The Hong Kong government believes that a favorable tax environment is one of the critical factors asset managers consider before deciding where to settle. As a result, the crypto-friendly country wants to implement zero tax for these hedge funds and billionaire family offices to lure them into the nation.
The proposed tax exemptions will cover investments in private credit, overseas property, and carbon credits in addition to crypto. Patrick Yip, vice chair at Deloitte China, noted that the measures would provide much-needed certainty for investors and family offices, many of which already allocate significant portions of their portfolios to digital assets.
“This is a significant step toward bolstering Hong Kong’s reputation as both a financial and crypto trading hub,” Yip remarked, adding that family offices in the city are increasingly eyeing digital assets as part of their investment strategies.
Hong Kong’s proposal comes amid fierce competition with regional rival Singapore, which has also been courting billionaires and fund managers. Both jurisdictions have introduced lightly taxed fund structures to attract global capital.
However, recent anti-money laundering measures in Singapore have slowed the establishment of family offices, offering Hong Kong an opportunity to gain ground.
Hong Kong has been promoting its open-ended fund company structure to stay competitive. The fund is designed to house large pools of assets and sub-funds under a single low-tax framework. As of October, more than 450 of these funds had been launched in the region. By comparison, Singapore’s variable capital company structure, introduced in 2020, has attracted over 1,000 funds.
Industry experts believe Hong Kong’s proposed tax breaks could level the playing field. Darren Bowdern, head of asset management tax for Asia at KPMG, emphasized that such measures aim to eliminate the risk of tax liabilities for fund managers, putting Hong Kong on par with global finance hubs like Singapore and Luxembourg.
The push for tax reforms comes as Hong Kong seeks to reclaim its edge in global wealth management. UBS CEO Sergio Ermotti recently praised the country’s progress, warning that Hong Kong could overtake Switzerland as the leading wealth management center.
With the growing interest in digital assets and the shifting preferences of ultra-high-net-worth individuals, Hong Kong’s latest initiative signals a determined effort to remain a magnet for global capital and innovation. The final outcome of the consultation could shape the city’s financial future and its place in the global crypto economy.
Disclaimer: Coinspeaker is committed to providing unbiased and transparent reporting. This article aims to deliver accurate and timely information but should not be taken as financial or investment advice. Since market conditions can change rapidly, we encourage you to verify information on your own and consult with a professional before making any decisions based on this content.
Chimamanda is a crypto enthusiast and experienced writer focusing on the dynamic world of cryptocurrencies. She joined the industry in 2019 and has since developed an interest in the emerging economy. She combines her passion for blockchain technology with her love for travel and food, bringing a fresh and engaging perspective to her work.
