Hong Kong Plans To Exempt Hedge Funds, Private Equity Firms and the Super Rich From Paying Crypto Taxes: Report

Hong Kong is reportedly eyeing new tax policies that can help in its push to become a top finance and cryptocurrency hub.

Citing a 20-page proposal that was circulated this week, The Financial Times reports that China’s special administrative region (SAR) plans to exempt private equity funds, hedge funds and the investment vehicles of the super-rich from paying taxes on crypto profits.

Hong Kong also wants to extend the tax exemption to other investments, including private credit, overseas property and carbon credit. The SAR is now conducting a six-week consultation on the proposals.

The development comes as Hong Kong and regional rival Singapore compete to be the top offshore finance destination. The proposal says Hong Kong wants to create a conducive environment for asset managers who consider taxation as a key deciding factor for choosing the base of their operation.

Deloitte China international tax partner Patrick Yip says the tax exemption proposal will give family offices and investors “certainty” if it pushes through. He says some family offices in Hong Kong allocate up to about 20% of their portfolio to digital assets, which he notes “is not insignificant.”

“This is an important step in boosting Hong Kong’s status as a financial and crypto trading hub.”

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