Press Release - Private Equity Welcomes Tax Exemption Status for Funds
18-03-2014
HONG KONG, 18 November 2013 – The Hong Kong Private Equity Finance Association (“HKPEFA”) welcomes the release of the research reports by the Financial Services Development Council (“FSDC”) to strengthen Hong Kong’s position as the preeminent international financial center. The private equity industry is pleased with the proposed Safe Harbor Rule to grant tax exemption to private equity funds, a critical step forward to help develop the industry and to bring clarity on the tax status of many private equity funds in Hong Kong. The tax exemption will bring the private equity industry more or less in par with the hedge fund industry, and it is expected that this move will lure interest from many mainland and international fund managers to set up offices in Hong Kong. “The industry is receptive to the extension of tax exemption status to private equity funds, which is seen as an important step to develop Hong Kong as a fund hub in the region, a policy objective set by the administration a couple of years ago. In fact, we have seen a growing number of fund managers enquiring about the progress of the tax exemption legislation in the last six months, since the Financial Secretary revealed the policy initiative in the budget speech in February this year. We are encouraged to see the tax exemption to cover special purpose vehicles (SPV) set up in Hong Kong, a commonly used vehicle for holding assets in the private equity industry, for as long as these SPVs do not hold substantial real estate assets”, said Simon Ho, Chairman of HKPEFA. "Hong Kong has come a long way in developing the private equity industry and the tax exemption come just at the right time when our neighboring cities such as Singapore, Shenzhen and Shanghai are stepping up their efforts to introduce tax incentives to attract fund managers and other service providers to move their operations to these destinations”, said Patrick Ip, Vice Chairman of HKPEFA who is also the Head of Portfolio Supervision Management and Risk Management of the China ASEAN Investment Cooperation Fund, an outbound China government quasi-sovereign equity investment fund announced by the previous Chinese Premier Wen Jiabao in 2009, and further approved by the National Development and Reform Commission in 2013. ​"While tax exemption may bring an impetus to attract mainland and international fund managers to set up offices in Hong Kong, we expect to see job opportunities being created in the fund management sector as well as an increasing demand for service providers including lawyers, fund accountants, tax advisors, fund administrators and custodians. The HKSAR government has to beef up its long term human capital planning to encourage business school graduates to develop a career in the fund management sector. HKPEFA will continue to work with industry bodies and service providers to provide education and training opportunities for practitioners in the industry as well as young professionals who are willing to develop a career in the industry. We are pleased to see that the FSDC proposes to the government to develop a sustainable talent model to help Hong Kong stay competitive with other neighboring jurisdictions”, said Simon Ho. ​ Media Enquiries: Strategic Financial Relations Limited Heidi So: +852 2864 4826, heidi.so@sprg.com.hk Cindy Lung: +852 2864 4867, cindy.lung@sprg.com.hk Denise Siu: +852 2114 4913, denise.siu@sprg.com.hk