Hong Kong’s FSDC Proposes Policies To Attract PE Funds

Hong Kong’s Financial Services Development Council (FSDC) released a report and proposed changes to Hong Kong’s tax law to attract the private equity industry to the special administrative region.

If implemented, the proposal will give private equity investors the same tax benefits already enjoyed by mutual funds and hedge funds in the city.

Private equity investors will also have tax neutrality for offshore funds investing in offshore private companies while the fund is managed from Hong Kong.

Lastly, the proposal for new open ended investment company regulations will create a flexible vehicle for fund managers to use for onshore funds in Hong Kong.

Financial services industry directly contributed over HKD300 billion or 16% in value to the GDP of Hong Kong in 2011, making it the second
largest sector in the economy. It also contributed no less than HKD40 billion in profits taxes and stamp duty in 2011 to 2012.

Over the past decade, financial services has been a major growth driver of Hong Kong’s economy, growing at a compound annual growth rate of 7%, which is nearly double that of the overall economy.