Hong Kong Plans Tax Incentives to Boost Asset and Wealth Management

According to PANews, on October 21, Hong Kong's Secretary for Financial Services and the Treasury, Christopher Hui, announced in his blog 'Financial Treasury Talk' that the government plans to enhance tax incentives for the asset and wealth management industry to further expand the market. Hui stated that the government proposes to broaden the categories of eligible assets to align with the overall financial development strategy of the Financial Services and the Treasury Bureau. The new categories include carbon emission derivatives/allowances, insurance-linked securities, loans, private debt investments, and virtual assets, allowing transactions of these assets to be exempt from profits tax. Additionally, the proposal suggests that any person operating a financial institution, insurance business, or money-lending business in Hong Kong, who also holds a beneficial interest of 10% or more in a fund, will be deemed to derive taxable profits from income obtained through loans or private debt investments related to that fund. If the fund is an associate of the person, any percentage of beneficial interest will apply. The next step involves the Financial Services and the Treasury Bureau issuing a consultation paper to gather and analyze opinions before proposing relevant legal amendments to implement these optimizations, thereby providing further impetus for industry development.