Hong Kong Gazettes Offshore Private Equity Tax Exemption
Hong Kong’s Government has published in its Official Gazette the Inland Revenue (Amendment) Bill 2015, which would extend the profits tax exemption for offshore funds to private equity funds. The Bill will be tabled in the Legislative Council on March 25.
To reinforce Hong Kong’s aim of becoming a venture capital and private equity hub in Asia, the Bill will provide a tax exemption for offshore private equity funds in respect of profits gained through the disposal of portfolio companies incorporated outside Hong Kong.
The Secretary for Financial Services and the Treasury, K C Chan, noted that the Bill “will help attract more private equity fund managers to set up or expand their business in Hong Kong and hire local asset management, investment, and advisory services, which will be conducive to the further development of our asset management industry.”
“This will in turn drive demand for other relevant professional services, such as business consulting, tax, accounting, and legal services,” he added.
The city’s private equity industry is growing, with the total capital managed by Hong Kong’s private equity funds reaching USD114.6bn at the end of last year, a 16 percent year-on-year increase. This represents 21 percent of Asia’s total capital managed by private equity funds.
