Hong Kong on July 17 published in its official gazette Inland Revenue (Amendment) (No.2) Ordinance 2015, which extends the profits tax exemption for offshore funds to private equity funds.
To qualify for the profits tax exemption, offshore private equity funds must carry out specified transactions through corporations licensed by the Securities and Futures Commission, or they must have more than four investors, the capital commitment made by investors must exceed 90 per cent of aggregate capital commitments, and the originator must not receive more than 30 percent of the net proceeds from the fund’s transactions.
Special rules prevent local companies from taking advantage of the new rules.
“By providing clear tax exemption to specified transactions conducted by offshore private equity funds or their special purpose vehicles, we hope to attract more private equity fund managers to expand their business in Hong Kong and hire local asset management, investment and advisory services, which will be conducive to the further development of our asset management industry,” a government spokesman said.
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