Hong Kong is set to expand the carried interest taxation regime, as the city steps up policies to maximise the number of family offices and asset management firms.
Documents seen and first reported on by The Financial Times, shows that Hong Kong authorities are introducing a raft of measures to incentivise more asset management firms and associated family offices to relocate out of the city.
Under a bill that the legislative council will consider “imminently”, profit from a range of investments would be eligible for tax treatment as carried interest, rather than just profit from private equity transactions, the newspaper reported.
In theory, this could exempt performance fees from taxation. The move will also mark a significant shift from the current framework, which limits favourable tax treatment largely to private equity transactions.
The 2026-2027 Budget
Earlier this year, Hong Kong introduced a sweeping range of taxation measures in the 2026-2027 budget that align with this expansion of the carried interest regime.
The budget included stamp duty waivers for the REIT market whilst also including precious metals in the qualifying investment assets list.
These measures enhance Hong Kong’s appeal to investment funds and supports the development of the gold market: a commodity traded by GCC family offices.
Family Office Growth
The family office sector in Hong Kong has experienced remarkable growth, surpassing 3,300 offices last year, despite strong competition from other major financial hubs namely Dubai and Singapore.
DIFC-based family offices continue to seek new opportunities, including selective regional investments, while remaining globally diversified amid ongoing geopolitical tensions.
Sector experts regard the enhanced tax regime as a pivotal enhancement to Hong Kong’s competitive edge although UAE family offices are seeking new transactions irrespective of the ongoing conflict.
Further details concerning the improved tax incentives are expected to be announced later this year.
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