Hong Kong Fund Tax Breaks to Exclude Proprietary Trading Firms

Proposed Hong Kong fund tax breaks for asset managers and family offices will exclude proprietary trading firms because businesses investing their own capital do not meet the government's definition of an investment fund.

The clarification potentially excludes firms such as Jane Street, Citadel Securities and Jump Trading from incentives being introduced as Hong Kong competes with Singapore and Dubai for investment managers and financial talent.

The government plans to broaden its tax-free carried interest regime to cover more fund houses and individual managers.

However, the Financial Services and the Treasury Bureau said remuneration generated by proprietary trading activities would not qualify for preferential treatment.

Hong Kong intends to resume the bill's second reading in the Legislative Council later this year.

The legislation forms part of wider efforts to expand the city's asset management and family office ecosystem while ensuring tax concessions remain targeted at qualifying investment fund structures.