--- title: "Hong Kong plans to exempt private equity hedge fund managers from performance fee taxes, industry: will disrupt the industry's rules of the game" type: "News" locale: "en" url: "https://longbridge.com/en/news/280756805.md" description: "The Hong Kong government plans to amend tax policies to exempt private equity and hedge fund managers from taxes on carried interest and performance fees, aiming to attract more asset management talent and enhance Hong Kong's competitiveness as a global financial center. This proposal is expected to be submitted to the Legislative Council in the first half of this year and is planned to be retroactive to 2025. Industry insiders believe that this move will disrupt industry rules and provide greater tax clarity. The current 0% tax rate only applies to private equity and the application process is complex. The proposal also suggests expanding the tax exemption scope to more asset classes" datetime: "2026-03-27T08:55:06.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/280756805.md) - [en](https://longbridge.com/en/news/280756805.md) - [zh-HK](https://longbridge.com/zh-HK/news/280756805.md) --- # Hong Kong plans to exempt private equity hedge fund managers from performance fee taxes, industry: will disrupt the industry's rules of the game According to Bloomberg reports, the Hong Kong government is close to proposing a tax amendment that aims to exempt private equity funds and hedge fund managers from paying taxes on carried interest and performance fees. Industry insiders have stated that if this move includes hedge funds, it will become a game changer that disrupts the industry. According to a proposal submitted to the Legislative Council on March 2, this tax exemption will apply to both corporate and individual tax levels. By expanding the exemption to individuals, Hong Kong hopes to attract more top asset management talent to settle in Hong Kong, in order to face fierce competition from other financial centers such as Singapore and Dubai. The report indicates that the government aims to submit the relevant bill to the Legislative Council in the first half of this year and plans to make the rules retroactive to 2025. Adam Williams, Managing Director of Alvarez & Marsal Tax Hong Kong, stated that if this tax incentive is implemented, it will provide clarity for eligible private equity managers, allowing them to enjoy the carried interest exemption in Hong Kong regardless of where the fund is registered. He further pointed out that although specific details are still to be confirmed, some hedge funds may still have the opportunity to enjoy tax-exempt carried interest through restructuring, which will become a game changer in this area of the asset management industry. ## Current 0% Tax Rate Limited to Private Equity Currently, Hong Kong's 0% preferential tax rate only applies to carried interest from private equity investments and is quite complicated in actual application. Carried interest refers to the profits shared by general partners of private equity or venture capital funds as a return for their investment management services. Hedge funds traditionally charge performance fees of 20% on investment profits, but have faced pressure in recent years to meet conditions such as exceeding the "high watermark" of fund net asset value. This year's Budget has already announced plans to expand the tax exemption system for funds to include single investor funds. The proposal in March also further suggested including retirement funds and donation funds within the scope of the exemption. In addition, the proposal aims to list more categories of assets as eligible investment projects for fee reductions, including digital assets, insurance-linked securities, carbon credits, precious metals, and specific commodities. The Secretary for Financial Services and the Treasury, Christopher Hui, reiterated that the government plans to extend tax relief to family offices and private credit funds. At the same time, if companies choose to conduct internal cash management through Hong Kong, the government also intends to provide tax incentives for corporate treasury management ### Related Stocks - [00HSI.HK](https://longbridge.com/en/quote/00HSI.HK.md) ## Related News & Research - [‘Golden week’: Hong Kong draws more mainland Chinese visitors but spending uneven](https://longbridge.com/en/news/285096549.md) - [Hong Kong records 13% rise in mainland Chinese visitors on day 1 of ‘golden week’](https://longbridge.com/en/news/284962730.md) - [Why a Team-Based Approach Is Redefining Retirement for Today's Investors](https://longbridge.com/en/news/285101749.md) - [EZ2290 Opens IRS Form 2290 Pre-Filing for 2026-2027 Tax Year](https://longbridge.com/en/news/285509513.md) - [Tax990 Launches Major Platform Upgrade with Protection Plus and Expanded Filing Tools Ahead of the May 15th Form 990 Deadline](https://longbridge.com/en/news/285094456.md)