FSDC releases report on promoting Hong Kong's private equity fund businesses

The following is issued on behalf of the Financial Services Development Council:

     The Financial Services Development Council (FSDC) today (July 26) released a report entitled "Proposals to Extend Offshore Private Equity Fund Tax Exemption to Hong Kong Businesses". The report sets out some key recommendations with an aim of harmonising the existing offshore private equity fund tax exemption regime.
     The Chairman of the FSDC, Mrs Laura M Cha, said, "Hong Kong has taken positive steps over the years to provide a business-friendly tax regime for the private equity and venture capital funds industry. In the face of the keen competition among jurisdictions to be the leading international asset management centre in the region, Hong Kong should strive to uphold its prevailing competitive edge in the industry.
      "There is room for further enhancement of the tax exemption regime. Private equity and venture capital funds' investments in Hong Kong and non-Hong Kong portfolio companies should be placed on a level playing field."
     The report analyses the limitations of the current offshore private equity fund tax exemption regime and proposes a number of refinements, with the objective of reinforcing Hong Kong's role as the largest international asset management centre in the region. The refinements include: (i) extending the tax exemption to cover investment in Hong Kong private companies and non-Hong Kong private companies with substantial operations in Hong Kong, subject to certain exception; (ii) removing certain tax implications relating to tainting; and (iii) expanding the scope of allowable activities of a special purpose vehicle which can be tax exempted.
     The full version of the report can be downloaded from the FSDC website: www.fsdc.org.hk.
About the FSDC
     The Hong Kong Special Administrative Region Government established the FSDC in 2013 as a high-level, cross-sectoral advisory body to engage the industry in formulating proposals to promote the further development of Hong Kong's financial services industry and to map out the strategic direction for development.
     The FSDC set up five committees, namely the Policy Research Committee, the Mainland Opportunities Committee, the New Business Committee, the Market Development Committee and the Human Capital Committee, as the five streams of its work.

Ends/Wednesday, July 26, 2017
Issued at HKT 15:00