Hong Kong financiers press for tax breaks after Singapore unveils rival scheme

Hong Kong financiers are urging the government to expedite its proposed tax break on carried interest following Singapore's unveiling of a similar tax-exemption scheme, according to industry participants. The bill, which has sparked debate within the financial sector, aims to exempt fund managers and their employers from paying salaries tax on performance fee income.

The move is seen as crucial for maintaining Hong Kong's reputation as the world's leading wealth management center and attracting global fund managers to establish their businesses in the city. Jasmine Lee, vice-president of the Hong Kong Institute of Certified Public Accountants, expressed optimism about the potential benefits of the proposed law change, stating that it would contribute to the local economy through increased spending by fund managers.

However, some industry professionals have raised concerns about the fairness of the exemption and the potential for traders to relocate to jurisdictions offering similar tax incentives if the bill is delayed. Singapore's recently announced measures, including a tax exemption for investment profits earned by managers of single-family offices and other qualifying funds, have further intensified the competition between the two jurisdictions.

While tax breaks are an important factor for global capital, market observers emphasize that Hong Kong's position as a premier asset management hub is underpinned by a robust ecosystem of access, rule of law, and long-term certainty, along with its deep capital pool and unique access to emerging opportunities in mainland China.