Hong Kong revised tax regulations attract funds and family offices to set up businesses.

Today (June 12), the Hong Kong government published in the Gazette the draft of the "2026 Inland Revenue (Amendment) (Concessionary Tax Regime for Funds, Family Investment Vehicles and Associated Entities) Bill" to optimize the concessionary tax regime for funds sold in private form, family investment vehicles managed by qualified single-family offices, and associated entities to attract more funds and family offices to establish in Hong Kong. The "Bill" will be submitted to the Legislative Council for first reading on June 24. The "Bill" covers revisions to the Inland Revenue Ordinance in the following areas, including: (1) expanding the definition of "funds"; (2) expanding eligible investment types; (3) removing the 5% threshold for associated transactions; (4) extending tax exemptions for specified purpose entities and family specified purpose entities; and (5) introducing a series of optimization measures for the tax regime of associated entities. The "Bill" will also introduce tax reporting mechanisms under a unified tax-exempt fund regime, as well as substantive economic activity requirements similar to the tax relief regime for family investment vehicles. A spokesperson for the Hong Kong Treasury said: "Hong Kong has become the world's largest cross-border wealth management center. The '14th Five-Year Plan' of the country explicitly supports Hong Kong to continue strengthening its function as an international asset and wealth management center. In this regard, the government has been committed to creating a competitive tax environment to consolidate Hong Kong's leading position in this area. The anticipated revisions under the 'Bill' are expected to attract more funds and family offices to establish and operate in Hong Kong, creating new opportunities for the asset and wealth management industry in Hong Kong, especially supporting further private debt investment activities in the region, and promoting the development of Hong Kong in the fields of digital assets, precious metals, and commodities trading."