Hong Kong’s proposed bonus tax break for fund talent set to sharpen edge over Singapore
Incentive will give Hong Kong the lowest tax rate globally for fund managers whose income is largely driven by performance fees, sources say
At present, Singapore’s general salaries tax can reach 24 per cent, the UK’s up to 45 per cent and the US up to 50 per cent, while profit tax in those markets ranges between 17 and 32.5 per cent.
In Hong Kong, individuals face salaries tax capped at a standard rate of 15 per cent, while companies pay corporate profits tax at 16.5 per cent.
Under the plan, fund staff would be exempt from salaries tax on performance fee income, while fund houses would not need to pay profit tax on such income. The measure would take effect retroactively from April 2025, according to a government paper presented to lawmakers earlier this year.
The proposed tax incentive would give Hong Kong the lowest tax rate worldwide for managers of hedge funds, private equity funds and venture capital funds whose income was largely driven by performance fees, the source said.