Hong Kong is strengthening its status as a leading offshore financial hub by introducing tax exemptions for private equity funds, hedge funds, and high-net-worth investors.
These exemptions extend to profits derived from cryptocurrencies, private credit, and various alternative assets.
According to the Financial Times, Hong Kong’s government has detailed in a 20-page proposal how tax policies significantly influence where asset managers choose to operate. The government focuses on creating a competitive and appealing environment through favourable tax reforms to attract more of these managers.
The Hong Kong government is reportedly seeking to broaden tax exemptions to include investments in private credit, overseas property, and carbon credits. A six-week consultation period has been initiated to refine the proposal to gather feedback from stakeholders and industry experts.
Hong Kong is making significant strides to establish itself as a leading cryptocurrency operations hub, leveraging tax incentives and regulatory advancements to attract global investors and crypto firms.
Building on recent initiatives, the government has proposed extending tax concessions for privately offered funds and family offices to include cryptocurrency investments. During Hong Kong Fintech Week on October 28, Christopher Hui, Secretary for Financial Services and the Treasury, announced plans to introduce legislation by year-end to formalize these tax breaks. These measures aim to fuel market growth while providing financial incentives to investors.
In parallel, Hong Kong has introduced a robust regulatory framework to solidify its position in the digital asset space. So far, the Securities and Futures Commission (SFC) has issued licenses to prominent platforms such as OSL Exchange, HashKey Exchange, and HKVAX, highlighting the city’s commitment to creating a thriving crypto ecosystem.
To further align with global standards, Hong Kong’s two central financial regulators, the Hong Kong Monetary Authority (HKMA) and the SFC have announced plans to adopt the European Securities and Markets Authority’s (ESMA) reporting standards for crypto over-the-counter (OTC) derivatives.
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