HONG KONG: Hong Kong has enacted legislation to introduce a profits tax exemption for privately offered open-ended fund companies (OFCs) if their central management and control exercised in Hong Kong.
The Inland Revenue (Amendment) (No. 4) Bill 2017 implements the measure, which was announced at the 2017-18 Budget. A government spokesman said, “The Bill seeks to create a level playing field for all kinds of OFCs by allowing onshore privately offered ones, like the offshore ones, to enjoy profits tax exemption. We hope that the Bill would be conducive to enhancing Hong Kong’s competitiveness in respect of the domiciliation of privately offered funds in the form of an OFC, thereby generating demand for services along the whole fund service chain. This would help strengthen Hong Kong’s position as an international asset management centre and foster the further development of our financial services industry as a whole.”
“As this is the first time that Hong Kong is granting tax exemption to onshore funds which are privately offered, we have borne in mind the need to prevent tax abuse and have put in place a series of anti-avoidance measures. The exemption conditions are to ensure that the OFC is non-closely held and that the transactions must be carried out through or arranged by a qualified person in permissible asset classes. The proposal balances the aim of strengthening our asset management industry on the one end and the need to prevent tax avoidance on the other.”
