Hong Kong plans to offer cryptocurrency tax breaks to hedge funds and super-rich families

Hong Kong plans to exempt private equity funds, hedge funds and investment vehicles of the super-rich from paying taxes on gains from cryptocurrencies, private credit investments and other assets. The Hong Kong government said in a 20-page proposal this week that tax is "one of the main considerations" for asset managers when deciding where to do business and that it wants to create a "favorable environment" for them. Under the proposal, the Hong Kong government wants to expand the scope of tax-free investments to include private credit, overseas real estate and carbon emission allowances. The government is in the process of a six-week consultation on the plan. The proposal comes as regional rivals Hong Kong and Singapore are trying to boost their status as top offshore financial centers. They have been working to attract billionaires and investors and have set up new low-tax fund structures that allow them to hold large amounts of money. Patrick Yip, vice chairman and international tax partner at Deloitte China, who specializes in family offices, said that if implemented, Hong Kong's new tax exemption proposal would provide "certainty" for family offices and investors. "This is an important step in enhancing Hong Kong's status as a financial and cryptocurrency trading center," said Patrick Yip. He added that some family offices in Hong Kong currently allocate up to around 20% of their portfolios to digital assets, which is “not insignificant”. (FT)