Tax Incentives | Hong Kong Family Office Tax Relief Update

With the passage of the (Tax Relief for Family Investment Control Vehicles) Bill by the Legislative Council of the Hong Kong Government, special tax incentives will be provided to single-family offices, whose investment profits will be exempted from tax in Hong Kong subject to fulfillment of certain conditions.

01 Definition of qualifying and incidental transactions

A transaction in which a family control vehicle is eligible for profits tax relief is known as a"Qualifying transactions"These transactions are based on specified assets. Whereas"Side deals"means a transaction in connection with the conduct of an Eligible Transaction, in which the incidental transactionMust meet the 5% threshold.

For incidental transactions, the business income of a family controlled vehicle arising from incidental transactions must not exceed 5% of the total amount of business income from the qualifying transactions and the incidental transactions during the basis period for the relevant year of assessment. the qualifying transactions must be carried out in Hong Kong by a qualifying single family office of the family concerned or arranged by a qualifying single family office in Hong Kong.

Specified assets under the IRO include the following:

• Securities;

• Shares, stock, debentures, debenture stock, funds, bonds or notes of a private company (or issued by it);

• Futures contracts;

• Foreign exchange contracts;

• Deposits other than lending operations;

• Bank deposits;

• Certificate of Deposit;

• Commodities traded on an exchange;

• Foreign currency;

• OTC derivative products;

• Shares in investee companies jointly invested by the Partnership Fund and the Innovation and Technology Venture Fund Corporation under the Innovation and Technology Venture Program.

To a certain extent, the latest tax relief legislation is uniquely suited to provide UHNWIs and their wealthy families with the opportunity to set up a family office in Hong Kong and carry out their business in Hong Kong.Investment arrangements,Wealth Managementcap (a poem)an inheritanceProvide more convenience, concessions and flexibility.

02 Large tax breaks and reliefs covering a wide range of areas

Under the tax relief ordinance, the number of people fromprofits from the investment of qualifying assets are exempt from profits tax.Also incidental income generated during the holding of qualifying assets can beTax exemption within the limit of 5%.

The tax concession relief under the Tax Relief Ordinance covers most of the common financial products that families invest in, bringing more benefits to HNWIs and their families.03 No application or pre-approval required

It is worth mentioning that enjoying tax benefits under the tax relief regulationsNo application or pre-approval required, eligible single family offices can self-assess on their own merits and declare their entitlement to family office tax concessions in their profits tax returns.

04 Meeting global and flexible needs

For qualified family offices and high net worth individuals, the Hong Kong operating requirements have been changed from "centrally managed and controlled" to "centrally managed and controlled"."Normally managed or controlled"This is to make it easier for wealthy families to relocate their qualified family office operations outside Hong Kong.

(1) The statute does not establish a mandatory requirement for local investment, and the family office mayInvest globally at your own choice.

(2) It does not have a mandatory requirement to hire local employees, which means that employeesneed not be a permanent resident of Hong Kong.surname YeThere is no restriction on whether an employee is a family member.

Below is a comparison of the latest tax relief legislation with the current relevant tax arrangements in Singapore:

Predictably.tax reliefRegulations will provide profits for investments related to family wealthStability of tax exemption in Hong Kongand has been warmly received by high net worth individuals and families.

By engaging withFamily OfficeThe tax relief legislation will further facilitate the harmonization of the various measures for relocation to Hong Kong.factBecome one of the key centers for the establishment and operation of family offices worldwide.