Hong Kong is moving to exempt private equity funds, hedge funds, and investment vehicles owned by billionaires from taxes on cryptocurrency gains, private credit investments, and other assets, according to a report by the Financial Times.
The plan is aimed at strengthening the city’s position as a premier offshore financial hub.
A 20-page Hong Kong government proposal has highlighted tax policy as a crucial factor for asset managers deciding where to base their operations. The proposal, obtained by the Financial Times, seeks to create a “conducive environment” for investment management in Hong Kong.
In addition to cryptocurrency, the exemptions would cover private credit, overseas property, and carbon credits with the Hong Kong government having launched a six-week consultation to refine the proposal, which aligns with its broader strategy to attract high-value financial players.
The announcement comes as Hong Kong and Singapore vie for dominance as top offshore financial destinations. Both cities have introduced low-tax fund structures to attract billionaire family offices and large-scale investors.
While Hong Kong promotes its Open-Ended Fund Company (OFC) structure, Singapore introduced the Variable Capital Company (VCC) in 2020. As of October, Hong Kong has registered over 450 OFCs, while Singapore has launched more than 1,000 VCCs.
However, Singapore’s stricter anti-money laundering measures have reportedly slowed the establishment of new family offices, giving Hong Kong an opportunity to lure investors.
