Hong Kong’s competitiveness as a financial center is about to be tested. The low-tax haven has two opposing forces that promise to transform its $5.4 trillion asset management industry, which overtook Switzerland as the world’s largest cross-border wealth hub last year.

The city is widely expected to approve a landmark tax reform designed to attract overseas asset managers. Under the proposal, effective taxes on qualified carried interest and performance fees at both the firm level and in the hands of Hong Kong-based employees would be wiped to zero. It’s super attractive considering that local residents face a salaries tax of up to 15%.

In addition, this concession will apply to a wide range of funds from private equity to family offices. The scope of eligible transactions will be widened to include physical commodities and cryptocurrencies. If passed, the tax exemptions would apply retroactively, starting from April 2025.

This generous offering will only speed up the pace of global hedge funds’ expansion in the city. Top-tier firms from Jane Street Group to Qube Research & Technologies have taken up large amounts of space in high-end skyscrapers. As a........

© The Japan Times