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Enoch Yiu

Hong Kong is set to attract top global fund managers to relocate to the city, as they will no longer need to pay salaries tax on performance-linked bonuses if they meet certain criteria under a proposed law change to be submitted to the Legislative Council, according to industry sources and academia.
If passed, the measure would make Hong Kong the first major Asian financial centre to grant tax relief on such bonuses, reinforcing the city’s role as the world’s largest offshore wealth management centre, a source familiar with the proposal said.
At present, Singapore’s general salaries tax can reach 24 per cent, the UK’s up to 45 per cent and the US up to 50 per cent, while profit tax in those markets ranges between 17 and 32.5 per cent.
In Hong Kong, individuals face salaries tax capped at a standard rate of 15 per cent, while companies pay corporate profits tax at 16.5 per cent.
Under the plan, fund staff would be exempt from salaries tax on performance fee income, while fund houses would not need to pay profit tax on such income. The measure would take effect retroactively from April 2025, according to a government paper presented to lawmakers earlier this year.

The proposed tax incentive would give Hong Kong the lowest tax rate worldwide for managers of hedge funds, private equity funds and venture capital funds whose income was largely driven by performance fees, the source said.
Many international firms had already sought advice from Hong Kong-based tax experts and accounting firms on expanding offices and relocating key staff to capture the benefits, the source added.
Secretary for Financial Services and the Treasury Christopher Hui Ching-yu recently said the bill would be submitted to the Legislative Council in the first half of the year. On Friday, a bureau spokeswoman said the bill was expected to be submitted by the end of this month.
The same bill would broaden tax exemptions to cover more products invested in by family offices and funds, including private credit, gold and other commodities, carbon credits, insurance-linked securities and certain digital assets. At present, only traditional investment products such as stocks and bonds qualify.
“By expanding the range of eligible funds and qualifying investments under the preferential tax regimes, the proposed enhancements seek to attract more funds and family offices to set up and operate in Hong Kong, reinforcing the city’s position as a leading asset and wealth management hub,” the government paper said.
The move would help Hong Kong retain its recently claimed title as the world’s top offshore wealth management centre, aligning its tax regime with Dubai, which imposed no salaries tax, said Wilson Chan Fung-cheung, an adjunct professor at City University and a banker for three decades.
“The new tax regime would help Hong Kong to compete with Dubai for talent in the fund industry, while the geopolitical tensions in the Middle East could further tilt the balance in Hong Kong’s favour,” he said.

The Hong Kong Venture Capital and Private Equity Association (HKVCA) on Friday expressed strong support for the proposed law changes.
“The changes, which would bolster Hong Kong’s role as a leading asset management hub, demonstrate the HKVCA’s active engagement to represent the industry’s views and priorities,” said Stephanie Hui, chairwoman of the association, in a statement on Friday.
Christine Lin, Greater China financial services wealth and asset management leader at consulting firm EY, said the move would benefit Hong Kong’s fund industry and wider economy substantially.
“The new tax regime would help Hong Kong attract talent in the fund industry,” she said.
Another source in the fund industry said that since many international fund managers were based in different markets, it was a matter of where they preferred to be tax residents. As such, the proposed tax cut could nudge them to relocate here.
To qualify as Hong Kong tax residents, managers would need to live in the city at least 180 days in a year or more than 300 days across two consecutive years.
This would increase demand for offices and housing, as well as education, while boosting consumer spending, the source said.
Under the government proposal, the fund companies and staff would still need to pay tax on other non-performance-linked income, such as management fees. However, most hedge fund managers charge fees based on fund performance, and their managers also receive income tied to performance, which would qualify for the new tax cut.


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Incentive will give Hong Kong the lowest tax rate globally for fund managers whose income is largely driven by performance fees, sources say


Incentive will give Hong Kong the lowest tax rate globally for fund managers whose income is largely driven by performance fees, sources say.


Hong Kong’s proposed bonus tax break for fund talent set to sharpen edge over Singapore

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Incentive will give Hong Kong the lowest tax rate globally for fund managers whose income is largely driven by performance fees, sources say

Incentive will give Hong Kong the lowest tax rate globally for fund managers whose income is largely driven by performance fees, sources say