Hong Kong Introduces Bill on Tax Exemptions for Single Family Offices with Minimum $30 Million Assets, Retrospective from 1st April 2022 & Passes Control, Holding Period & Immovable Property Tests
14th January 2023 | Hong Kong
Hong Kong government has introduced a Bill on tax exemptions for eligible single family offices with minimum $30 million assets (HKD 240 million), retrospective from 1st April 2022 and passing tests on family office control, holding period & immovable property. The Inland Revenue (Tax concessions for family-owned investment holding vehicles) Bill 2022 will exempt Hong Kong based family-owned investment holding vehicles (FIHVs) and portfolios of special purpose entities from tax. Family members must also own directly or indirectly 95% of the family office, and the family office central management & control must be exercised from Hong Kong, but the family office do not have to be incorporated in Hong Kong. The Bill is currently in review by the Legislative Council of Hong Kong. In 2022 February, the Hong Kong government had announced new tax concessions for eligible family management entities managed by single family offices. The announcement was made by Hong Kong SAR (Special Administrative Region) Financial Secretary Paul Chan in the FY2022-23 Budget, with tax concession expected to come into effect in the coming fiscal year. In 2022 October, new Hong Kong Chief Executive John Lee Ka-chiu announced a series of new policies to strengthen Hong Kong as a leading financial hub in his 2022 policy address (19th Oct 2022, Wednesday). For family offices, Hong Kong will give tax-concession to eligible family offices, and target to attract at least 200 of the world’s top family offices to set up or expand their operations by 2025. Hong Kong currently manages $216 billion (HKD 1.7 trillion) of assets from family offices & private trusts. See below for 2022 Hong Kong family office announcements.
“ Hong Kong Introduces Bill on Tax Exemptions for Single Family Offices with Minimum $30 Million Assets, Retrospective from 1st April 2022 & Passes Control, Holding Period & Immovable Property Tests “
Dixon Wong, Head of Financial Services and Global Head of Family Office at InvestHK
Dixon Wong, Head of Financial Services and Global Head of Family Office at InvestHK: “We are confident that these measures can further strengthen Hong Kong’s position as a family office hub in Asia. The connectivity with China and the world has allowed Hong Kong to become a “super-connector” and the city’s existing advantages of having a well-established legal system, competitive tax system, and world-class professionals specializing in asset management, will all help to create a conducive environment for family offices to develop in Hong Kong.”
FamilyOfficeHK
InvestHK offers a wide range of customised services, free of charge, to support your family office set up. It is also a central point of contact that can connect you with other relevant Government agencies and financial regulators, such as the Hong Kong Monetary Authority and Securities and Futures Commission. InvestHK’s key areas of services include: Planning, Set-Up, Launch, Expansion. Visit: Family Offices HK
InvestHK
InvestHK’s vision is to strengthen Hong Kong’s status as the leading international business location in Asia. Our mission is to attract and retain foreign direct investment which is of strategic importance to the economic development of Hong Kong. In all our services, we apply the following core values: passion, integrity, professionalism, customer service, business friendliness and responsiveness. We work with overseas and Mainland entrepreneurs, SMEs and multinationals that wish to set up an office – or expand their existing business – in Hong Kong. We offer free advice and services to support companies from the planning stage right through to the launch and expansion of their business. Visit: InvestHK
Hong Kong 2022 Policies to Strengthen Financial Hub: $3.8 Billion Investment, Family Office Tax Concession & Attract at Least Top 200 Family Offices, Revised IPO Listing Rules, Green & Sustainable Finance Platforms, Insurance & RMB Hub
22nd October 2022 – Hong Kong Chief Executive John Lee Ka-chiu announced a series of new policies to strengthen Hong Kong as a leading financial hub in his 2022 policy address (19th Oct 2022, Wednesday). For family offices, Hong Kong will give tax-concession to eligible family offices, and target to attract at least 200 of the world’s top family offices to set up or expand their operations by 2025. Hong Kong currently manages $216 billion (HKD 1.7 trillion) of assets from family offices & private trusts. To enhance Hong Kong as a leading global fundraising / IPO hub, the Hong Kong Main Board listing rules will be revised (2023) to allow fundraising of advanced technology enterprises that have yet to meet the profit & trading record requirements, and to revitalise GEM (formally known as the Growth Enterprise Market) to provide small & medium enterprises (SMEs) and start‑ups with a more effective fundraising platform. Hong Kong will also will promote more RMB‑denominated investment tools (Hong Kong is the largest offshore RMB business centre, processing about 75% of offshore RMB settlement globally), and promote mutual market access between Mainland China and Hong Kong in stocks trading, bonds, swaps & insurance. Other key areas to strengthen Hong Kong as a leading financial hub, includes developing green & sustainable finance platforms, international carbon market, risk management hub, regional insurance hub, reinsurance hub and to enhance competitiveness in Fintech (Currently, there are more than 600 Fintech companies in Hong Kong). Other key Hong Kong new policies include setting up a $3.8 billion (HKD 30 billion) fund to attract businesses to Hong Kong, and provide top talents with 2-year passes to explore opportunities in Hong Kong (Top Talent: Yearly Salary of > $318,000 or graduates top 100 universities with 3 years of work experience over last 5 years). Foreigners can buy residential property & become permanent residents, can now apply for refund of stamp duties (buyer’s stamp duty & new residential stamp duty) for their first property (under HK talent schemes, effective 19th Oct, Wed). See below for policy address on Hong Kong as a leading financial centre by Hong Kong new Chief Executive John Lee Ka-chiu. Read the full address here | View Policy Highlights here
Establish Hong Kong Investment Corporation Limited | Invests $3.8 Billion to Attract Businesses to Hong Kong – New Hong Kong Investment Corporation Limited (HKIC) to further optimise the use of fiscal reserves for promoting the development of industries and the economy. The HKIC will consolidate the Hong Kong Growth Portfolio, the GBA Investment Fund and the Strategic Tech Fund established under the Future Fund in recent years, as well as the Co‑Investment Fund mentioned in the ensuing sections. In pooling together relevant resources under the steer of the Government to invest in strategic industries, we aim to attract and support more enterprises to develop their business in Hong Kong.
Hong Kong – Leading International Financial Centre
Hong Kong is an international financial centre, the world’s largest offshore RMB business centre and a leading fundraising hub for biotechnology. The financial services sector is Hong Kong’s biggest pillar industry, accounting for more than one‑fifth of our gross domestic product. To enhance Hong Kong’s competitiveness in financial services, we will:
Enhance our position as a global fundraising platform – The Hong Kong Exchanges and Clearing Limited (HKEX) will revise the Main Board Listing Rules next year to facilitate fundraising of advanced technology enterprises that have yet to meet the profit and trading record requirements. It is also planning to revitalise GEM (formally known as the Growth Enterprise Market) to provide small and medium enterprises (SMEs) and start‑ups with a more effective fundraising platform.
Enhance our strengths as the largest offshore RMB business centre – Hong Kong currently processes about 75% of offshore RMB settlement globally. We will promote the launch of more RMB‑denominated investment tools and the provision of stable and highly efficient treasury services such as foreign exchange, exchange rate risk and interest rate risk management tools in the market. We will also enhance market infrastructure.
Promote mutual market access – We will speed up the implementation of a series of mutual market access arrangements supported by the China Securities Regulatory Commission earlier, including introducing a bill within this year to exempt the stamp duty payable for transactions conducted by dual‑counter market makers, with a view to enhancing the RMB stock trading mechanism, as well as completing preparations for the launch of the Northbound Trading of Swap Connect as early as possible. We will also explore enhancements to the Southbound Trading of Bond Connect so as to facilitate the issuance & trading of more diverse “dim sum” bonds, and continue the discussion with the Mainland on proposals for the further expansion of mutual market access. Moreover, we will strive to establish insurance after‑sales service centres in places such as Nansha and Qianhai in the near future to provide support services for residents in the GBA holding Hong Kong policies. This is also an important step towards mutual access of insurance markets in the GBA.
Develop green and sustainable finance – We will promote the development of Hong Kong as a premier financing platform for governments and green enterprises in the Mainland and around the world. We are also developing Hong Kong into an international carbon market, and will support the HKEX to continue pursuing co‑operation with, among others, financial institutions in Guangzhou in carbon market development.
Strengthen asset and risk management – Family offices is a key growth segment of the asset and wealth management industry. Last year, Hong Kong managed over $1,700 billion of relevant assets, including those for private trust clients. The Government will introduce a bill within this year to offer tax concession for eligible family offices. The target is attracting no less than 200 family offices to establish or expand their operations in Hong Kong by end‑2025. Moreover, we will implement a risk‑based capital regime for the insurance industry in 2024 to align with international standards, and launch a public consultation within this year on the proposal of establishing a policy holders’ protection scheme.
Continuously enhance our competitiveness in Fintech – Currently, there are more than 600 Fintech companies in Hong Kong. We will vigorously promote Fintech by encouraging more Fintech services and products to undergo proof‑of‑concept trials, taking forward cross‑boundary Fintech projects and nurturing Fintech talents. The Commercial Data Interchange will be launched within this year to provide a one‑stop platform for enterprises to share operational data, enabling banks to make accurate assessments on the operating condition of enterprises and providing SMEs with a better chance of securing loans. On virtual assets, the Government has introduced a bill to propose establishing a statutory licensing regime for virtual asset service providers. The Hong Kong Monetary Authority (HKMA) is examining market feedback on the regulation of stablecoins and will ensure that the regulatory regime is in line with both the international regulatory recommendations and the local context. The HKMA has also begun the preparatory work for issuing “e‑HKD” and is collaborating with the Mainland institutions to expand the testing of “e-CNY” as a cross-boundary payment facility in Hong Kong.
Hong Kong Chief Executive John Lee Ka-chiu 2022 Policy Address
Foreword: Start a New Chapter Together
- Today, I deliver the first Policy Address after my assumption of office as the Chief Executive. I deeply feel that I am charged with a heavy responsibility. I keep pondering the questions: What are the major concerns of our people? What is their vision for Hong Kong? And what are their expectations towards the Policy Address? Here, I express my gratitude to our people and all sectors of the community for offering me a wealth of suggestions over the past three months, and to my team for their concerted support. Together, we strive to build a better Hong Kong.
- The world is undergoing profound changes unseen in a century. The pandemic and rapidly worsening global economic outlook, coupled with high inflation, interest rate hikes, tightening monetary policies, trade disputes and geopolitical tensions, have weakened the growth momentum of the global economy. This will affect the pace of our economic recovery.
- Notwithstanding the challenges, Hong Kong has its own overriding advantages and enjoys abundant opportunities under the “One Country, Two Systems”. With the strongest business environment worldwide, Hong Kong is an international financial, trade and shipping centre, as well as the world’s largest offshore Renminbi (RMB) business centre. Apart from these, our emerging industries, such as innovation and technology (I&T), are thriving. Hong Kong has advanced infrastructure in both hardware and software, a sound legal system and top‑notch talents from all over the world. Located at the heart of Asia, Hong Kong is the most preferred destination for multinational corporations to set up their operations in Asia. An open and diversified metropolis where old and new styles meet, Hong Kong is also an appealing city embracing both Chinese and Western cultures.
- Under the “One Country, Two Systems”, Hong Kong has the distinctive advantages of enjoying strong support of the Motherland and being closely connected to the world. Having direct access to the huge Mainland market and strong international connectivity at the same time, Hong Kong serves as a bridge linking the Mainland and the rest of the world. Key national strategies including the 14th Five‑Year Plan, the development of the Guangdong‑Hong Kong‑Macao, Greater Bay Area (GBA), and the Belt & Road Initiative provide Hong Kong with unlimited opportunities.
- This year, the greatest encouragement was brought to us by President Xi Jinping’s visit to Hong Kong to attend the meeting celebrating the 25th anniversary of Hong Kong’s return to the Motherland and the inaugural ceremony of the sixth‑term Government of the Hong Kong Special Administrative Region (HKSAR), where he delivered an important speech. President Xi put forward “four musts” and “four proposals” and said that “Hong Kong will prosper only when its young people thrive”. This has reinforced the confidence of all sectors of the community in our future development. I am grateful to President Xi for his important speech, which now serves as my governance blueprint. Hong Kong has achieved a major transition from chaos to order, and is now at the crucial stage of advancing from stability to prosperity. In the next five years, I will lead the government team to unite and motivate all sectors of the community, and give full play to our fine traditions of inclusiveness, unity and respect for different viewpoints. We will make our best endeavour, all for better serving our people and better developing Hong Kong, so that the Pearl of the Orient will shine brighter than ever.
- This is a Policy Address for Hong Kong citizens. I will now outline my governing beliefs, visions and policy initiatives. Le us start a new chapter for Hong Kong
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