Following a recent question in the Legislative Council on the development of Hong Kong as a major fund management centre in Asia, the Secretary for Financial Services and the Treasury, Professor K C Chan, confirmed that it fund management is still one of the Hong Kong government’s top policy priorities. Nevertheless, the government does not have plans for additional tax breaks for this sector.
Chan said that “alongside our fundamental strengths as an international financial centre, including a stable currency with free flow of capital, a rich pool of talents, and a low and simple tax regime, we have been exploring various initiatives to further promote asset management business in Hong Kong”.
He noted that, while some in the fund industry have proposed the introduction of a legislative framework facilitating the establishment of investment fund vehicles, including the Open-ended Investment Company (OEIC) and Limited Partnership (LP) in Hong Kong, to attract more funds to domicile in Hong Kong, other market participants have pointed out that the attractiveness of a fund domicile also depends on other factors, and that the availability of more investment fund vehicles may not necessarily bring in more funds.
It was also confirmed that the government of Hong Kong is studying the proposal and is engaging with the fund industry in order to identify measures which suit Hong Kong’s market circumstances best of all.
In addition, in response to the question of whether the government has any plan to introduce a profits tax exemption for onshore funds, Chan replied that, while, at present, such an exemption is available for offshore fundsand the government is prepared to study proposals to enhance such tax exemptions in the light of market development, it needs to examine carefully the overall interests of Hong Kong.
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