Paul Chan says Hong Kong will improve tax breaks, step up charm offensive to attract more foreign funds and family offices

Hong Kong will enhance several measures aimed at attracting foreign funds and family offices, and host more financial conferences to improve the city's "branding" and economic appeal, Financial Secretary Paul Chan Mo-po said.

"We will further enhance the preferential tax regimes for related funds, single family offices and carried interest, including reviewing the scope of the tax concessions regime," Chan said during his budget announcement on Wednesday.

The city is set to increase the types of transactions that qualify for tax concessions and will enhance the flexibility in handling incidental transactions, with the aim of attracting more funds and family offices to establish a presence in Hong Kong, Chan said.

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The announcement comes as the government prepares for its second Wealth for Good summit in Hong Kong at the end of March. The city has invited family offices and wealth managers from across the globe to a two-day conference to showcase its advantages.

Shortly after last year's summit, Hong Kong announced a range of incentives for family offices, including a tax break in May and the launch of the Capital Investment Entrant Scheme (CIES), an investment-migration scheme, in December.

"For the family office industry, we are pleased to see the government's commitment to further supporting its development, [which is] evident in measures such as further enhancing the preferential tax regime for single family offices," said Chi-man Kwan, group CEO and co-founder of Raffles Family Office.

Financial Secretary Paul Chan during the budget announcement on Wednesday. Photo: Elson Li alt=Financial Secretary Paul Chan during the budget announcement on Wednesday. Photo: Elson Li>

Raffles Family Office had observed an accelerated trend of affluent families from the Greater Bay Area establishing family offices in Hong Kong in the past five years, particularly after the city fully reopened last year. This trend had been encouraged by Hong Kong's tax incentives, Kwan said.

Kwan added that CIES had generated a lot of interest among its clients. The scheme will soon invite applications, according to the government. Eligible investors, who invest HK$27 million (US$3.4 million) or more in qualifying assets and place HK$3 million into a new CIES Investment Portfolio, can apply to live in and pursue development in Hong Kong.

"In a highly competitive environment, strong and visible measures are required, and the government has certainly shown their support," said Cameron Harvey, CEO of Landmark Family Office, a private multifamily office in Hong Kong. "The enhancement of these measures will definitely be a positive for the industry and help to boost the in-flow of new funds and business to Hong Kong."

The government also said it would attract existing foreign funds to establish and operate in Hong Kong by putting in place user‑friendly fund re-domiciliation mechanisms for open-ended fund companies and limited-partnership funds.

The government is set to submit a legislative proposal in the first half of this year to enable companies domiciled overseas, particularly enterprises with a business focus in the Asia-Pacific region, to redomicile in Hong Kong.

The government also hopes to improve the city's image as a financial centre by hosting more conferences such as the Global Financial Leaders' Investment Summit last November and the Asian Financial Forum last month, as these present opportunities to showcase the capabilities of Hong Kong.

Chan said Hong Kong Investment Corporation will host a round table for international sovereign wealth funds. "Sovereign wealth funds and financial leaders will be invited to explore investment opportunities and develop collaborative partnerships," he added, without providing a time frame.

Additionally, a summit on investment and development of start-ups in Hong Kong will also be organised with the hope of bringing together prominent figures in the start-up ecosystem to boost collaboration among the investment, industry, academic and research sectors.

"Organising thematic conferences can help to reinforce Hong Kong's branding," Chan said, adding that the government will be continuing its tours of other markets and regions to "tell good stories of Hong Kong and expand our circle of friends".

Additional reporting by Aileen Chuang

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