New rules in Hong Kong are being planned to exempt offshore private equity funds from tax in Hong Kong with respect to investments made outside of Hong Kong.
The proposed changes were initially announced by the Financial Secretary in his 2013/14 budget speech. It is expected that draft legislation will be introduced to the Legislative Council in coming months.
The key changes proposed by the Government include:
- Amending the scope of the exemption to cover transactions in private companies incorporated outside of Hong Kong.
- Waiving the requirement for transactions to be carried out through or arranged by a person with an SFC license, if the PE fund is a bona fide private equity fund.
- Extending the scope of the offshore funds exemption to cover profits from investments made by SPVs owned by an offshore PE fund, including SPVs established in Hong Kong.
