Hong Kong is preparing a major tax regime overhaul that would exempt private
equity—and potentially hedge fund—managers from tax on carried interest and
performance fees at both corporate and individual levels, according to a March 2
proposal to the Legislative Council.
The proposed changes would expand on earlier reforms, including 2021
carried-interest exemptions, and could also extend benefits to hedge funds
depending on structuring. The government plans to introduce the bill in the
first half of the year, with possible retroactive application to 2025.
Additional proposed enhancements include expanding qualifying investments to
cover funds-of-one, pensions, endowments, digital assets, carbon credits,
precious metals, and commodities, as well as tax breaks for family offices,
private credit funds, and corporate treasury operations.
