Hong Kong proposes new tax breaks to challenge Singapore for global fund management

HONG KONG: Hong Kong is proposing an important new tax incentive that is aimed at attracting asset and wealth managers from other financial hubs, such as Singapore, Dubai, the United Kingdom, and the United States.  The talent the city hopes to attract includes finance professionals who manage hedge funds, private equity, and venture capital.

The changes to Hong Kong’s existing law would exempt wealth managers from salary tax on performance-based bonuses. At the same time, finance firms would not pay profits tax on performance-fee income. These changes would apply retroactively from April 2025.

The bill that would make these changes possible was announced some months ago, and on Friday (June 5), a spokeswoman announced it will be submitted by the end of the month.

In Singapore, taxes on salaries may go up to 24%, and in the UK and the US, they may reach up to 45% and 50%, respectively. The profit tax, meanwhile, is between 17% and 32.5% for the three countries. At present, people working in Hong Kong pay a standard 15% tax, and companies pay a 16.5% corporate profits tax.

Should Hong Kong’s legislators approve the changes, the city will become the first finance hub in Asia that offers this type of tax relief, offering the lowest tax burden across the globe for many fund managers.

Wealth managers will need to live in Hong Kong for at least 180 days each year to qualify for the tax benefits.

Reporting from the South China Morning Post quoted sources in the fund industry as saying they believe the tax relief may encourage international firms to expand their Hong Kong operations and relocate key employees to the city.

The legislation would also broaden existing tax exemptions to cover a wider range of investment assets, including private credit, gold, commodities, carbon credits, insurance-linked securities, and certain digital assets. 

“The new tax regime would help Hong Kong to compete with Dubai for talent in the fund industry, while the geopolitical tensions in the Middle East could further tilt the balance in Hong Kong’s favour,” SCMP quoted Wilson Chang Chan Fung-cheung, a longtime banker and adjunct professor at City University, as saying. /TISG

Read also: Singapore ranks 4th, Hong Kong 3rd in Global Financial Centres Index 2026