Home Alternative Investments Alternative funds may get tax breaks

Alternative funds may get tax breaks

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Bloomberg and staff reporter

Hong Kong’s government is considering new tax rules that would give more favorable treatment to popular alternative investments including private credit and infrastructure, according to people familiar with the matter.

The Financial Services and the Treasury Bureau responded that the authorities and other regulators are in contact with the industries to seek their advice and will launch a consultation on the detailed measures at a proper time, according to mainland media.

The proposals, set to be included in a consultation paper, would offer tax exemptions on items like interest income to special purpose vehicles for alternative investments including private credit, hybrid securities, real estate, and infrastructure the people said.

They added that the draft rules are expected to be released as early as this month.

The race to lure alternative funds is also heating up. Assets under management in the sector are expected to grow 70 percent from 2021 to US$23.3 trillion (HK$182.5 trillion) by 2027, according to estimates by Preqin.

Last Sunday, Financial Secretary Paul Chan Mo-po said the city will slash the tax rate on qualifying profits generated from patents from 16.5 percent to 5 percent, to encourage some industries to boost research and development activities in the city.

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