Hong Kong gazettes tax break for fund managers’ bonuses to bolster role as wealth hub

The Hong Kong government gazetted a bill on Friday that, if passed, would waive salary tax on fund managers’ performance-linked bonuses, so long as they meet certain requirements, in a move to introduce further tax reform to strengthen the city as a wealth management centre.

The bill, which will be first read by lawmakers on June 24, may attract more fund managers and family offices to operate in the city, the government said.

The measure would make Hong Kong the first major Asian financial centre to grant tax relief on performance-linked income to investment vehicles and their staff, and may attract more talent from abroad, reinforcing the city’s role as the world’s largest offshore wealth management centre, according to analysts.

The bill would also broaden tax exemptions to cover more products that family offices and funds invest in, including private credit, carbon credits, insurance-linked securities, certain digital assets, gold and other commodities. At present, only traditional investment products such as stocks and bonds qualify.

It would also expand the types of funds eligible for the exemption. Currently open-ended funds are exempt, and the bill would add to charity funds, pension funds, and so-called fund-of-one structures set up by global organisations, such as the Asian Infrastructure Investment Bank.