New Tax Policy to Lure More Private Equity Funds to Hong Kong

Tax Notes International published an article on August 9, 2021, titled "New Tax Policy to Lure More Private Equity Funds To Hong Kong" in which our Tax Partner Patrick Yip explained the details and analyzed the implications of Hong Kong’s tax policy on private equity funds, whose pioneering nature has been widely applauded as pragmatic and innovative. This article summaries the background of the relevant legislation, criteria for tax exemption, certification and monitoring of the tax exemption regime including certification by the Hong Kong Monetary Authority and its potential implication.

In this article, Patrick expressed his view that Hong Kong, coupled with its booming stock market, will likely become an even more attractive location for private equity funds to establish their presence and exit from their investments. Therefore, the new tax exemption regime for private equity funds is expected to bring major economic benefits to Hong Kong, as supported by the Hong Kong government’s economic analyses and studies that preceded the introduction of the policy.

The pioneering nature of the new policy, although seen as an about-face in response to necessity and threat, is widely applauded as exemplary of pragmatism and courage. That is how innovative tax policies can help improve the overall well-being of society at large. It is hoped that the new policy, although seemingly targeted at relieving the tax burden of an elite group, would ultimately provide benefits to Hong Kong’s economy that would reach all levels of society. However, only time will tell if Hong Kong has done enough to stem the “push and pull factors” that may have lured funds away from its borders.

Deloitte has won the "Hong Kong SAR Tax Firm of the Year" and "Hong Kong SAR Transfer Pricing Firm of the Year" in the 2021 Asia-Pacific Tax Awards 2021 by International Tax Review (ITR). Deeply appreciate your appreciation and recognition of our achievements over the past year!