Post by Alvarez & Marsal

Hong Kong's latest fund tax reforms represent one of the most significant expansions of its preferential tax framework in recent years, significantly broadening the range of structures, investors and investment strategies that can benefit from the tax exemption framework. 𝗞𝗲𝘆 𝗵𝗶𝗴𝗵𝗹𝗶𝗴𝗵𝘁𝘀: • "Funds-of-one", pension funds and endowment funds can now access the UFE regime, subject to prescribed conditions. • Qualifying investments expanded to include private credit, loans, non-corporate private entities, digital assets, carbon credits, precious metals and certain commodities. • The 5% incidental income threshold is removed, providing greater certainty for interest income and other ancillary returns. • Full tax exemption available for qualifying SPEs, regardless of the percentage ownership held by an exempt fund. • Anti-round tripping rules relaxed for many Hong Kong resident investors, including individuals and certain exempt persons. However, specific anti-round tripping rules will apply for financial institutions, insurance companies, money lenders where the fund derives profit from loans. • New reporting and substance requirements introduced for funds relying on the exemption. Fund managers, investors and family offices should revisit existing structures and future fund launches in light of the expanded exemption framework and new reporting and substance requirements. Our full tax alert is linked below. If you would like to discuss how the proposed changes may impact your fund or investment structure, please reach out. Read more: https://okt.to/rx2RTo #AMon #HongKong #AssetManagement #HedgeFunds James Badenach, Adam Williams, Rohit Narula, Yvette Chan, Louis Lam, Maggie To, Ruairi Lamb, Kasheen Grewal, Matthew Wu, Christy Ngai, Chris Lee, David Lewis