Hong Kong is reportedly eyeing a new tax policy that could help in its quest to become a top finance and cryptocurrency hub.
Citing a 20-page proposal circulated this week, The Financial Times reports that China’s Special Administrative Region (SAR) plans to exempt private equity funds, hedge funds and the investment vehicles of the super-rich from paying taxes on crypto profits.
Hong Kong also wants to extend the tax exemption to other investments, including private credit, overseas real estate and carbon credits. The SAR is now conducting a six-week consultation on the proposals.
The development comes as Hong Kong and regional rival Singapore compete for the top offshore financing destination. The proposal says Hong Kong aims to create a favorable environment for asset managers who consider taxation as a key deciding factor when choosing the basis of their activities.
Patrick Yip, Deloitte China’s international tax partner, says the tax exemption proposal will give family offices and investors “certainty” if it goes through. He says some family offices in Hong Kong are allocating up to 20% of their portfolios to digital assets, which he says is “not insignificant.”
“This is an important step in elevating Hong Kong’s status as a financial and crypto trading center.”
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