carried interest tax concession

The concessional tax treatment for carried interest is now effective from 1 April 2020 and will provide for a 0 tax rate for qualifying carried interest. The Inland Revenue Amendment Tax Concessions for Carried Interest Ordinance 2021 Ordinance was enacted into law on 7 May 2021 by way of amendment to the Inland Revenue Ordinance IRO.

Proposal On Hong Kong S Carried Interest Tax Concession Regime Lexology

Following its proposal to introduce a concessionary tax rate for carried interest earned from Hong Kong private equity funds on January 4 2021 the Hong Kong Government announced that eligible carried interest will be charged at a profits tax rate of 0 and that 100 of eligible carried interest will be excluded.

. The tax concession for a carried interest also looks through to the employees. The Bill offers a profits tax and salaries tax concession to qualifying persons and qualifying employees in relation to eligible carried interest received by or accrued to them on or after 1 April 2020. They provide for a 0 tax rate for qualifying carried interest further to the.

Eligible carried interest recipients. This is a milestone development for Hong Kongs asset and wealth management industry in. As a prerequisite to the concessionary tax regime the eligible carried interest must arise from profits on the in-scope transactions 2 of private equity PE funds which are exempt from profits tax under the Unified Fund Exemption Regime UFR.

The proposal states that the tax concession only applies to carried interest distributed by PE transactions only. On 29 January 2021 the Inland Revenue Amendment Tax Concessions for Carried Interest Bill 2021 the Bill was gazetted to amend the Inland Revenue Ordinance and introduce a concessionary tax treatment on eligible carried interest received by or accrued to qualifying recipients on or after 1 April 2020. Hong Kong enacted the Inland Revenue Amendment Tax Concessions for Carried Interest Bill 2021 the New Law on 7 May 20211 The New Law provides a tax regime offering tax incentives for eligible carried interest of qualifying persons and qualifying employees.

Only carried interest distributed out of tax-exempted qualifying transactions in private equity investments ie shares stocks debentures loan stocks funds bonds or notes of or issued by a private company under Schedule 16C of the Inland Revenue Ordinance would be eligible for the tax concession. Furthermore the Proposal clarifies that 100 of eligible carried interest would also be excluded from the employment income for the calculation of the investment professionals salaries tax. 11 rows As part of a longstanding Government policy to attract private equity PE and investment fund.

Carried interest tax concession - conditions Must be paid by a qualifying payer The carried interest must be paid by a certified investment fund ie. Under this new concession eligible carried interest received or accrued on or after from 1 April 2020 will be subject to zero percent profits tax. After six months of consultation the Inland Revenue Amendment Tax Concessions for Carried Interest Bill 2021 Bill providing for a tax concession for a 0 profits tax rate on eligible.

At the meeting of the Executive Council on 26 January 2021 the Council ADVISEDand the Chief Executive ORDEREDthat the Inland Revenue Amendment Tax Concessions for Carried Interest Bill 2021 the Bill at Annex A should be introduced into the Legislative Council LegCo to. Inland Revenue Amendment Tax Concessions for Carried Interest Bill 2021. Qualifying carried interest broadly includes carried interest received from gains from investments in private companies.

Applying retrospectively to tax years commencing on or after 1 April 2020 the Amendment Ordinance has essentially transformed Hong Kong into one of the most tax efficient jurisdictions for fund. Asset Management Tax Update of 29 January 2021 provided an overview of the Carried Interest Tax Concession Bill. The legislative council brief accompanying the Bill specifies that carried interest derived from a hedging transaction may only be eligible for the Tax Concession if the hedging transaction forms part and parcel of the private equity transaction and the profits on the hedging transaction are embedded in the profits or loss on such transaction for the calculation of.

Given tax treatment is one of the key factors influencing the choice of jurisdiction for fund domiciliation and operations it is announced in the 2020- 21 Budget Speech that the Government plans to provide tax concession for carried interest distributed by PE funds operating in Hong Kong. The Government has spared no efforts in developing Hong Kong as a premier PE fund hub. A qualifying payer is any of the following.

Tax concession rate The Proposal provides that eligible carried interest would be charged at a 0 profits tax rate such rate was kept silent under the Consultation Paper. To qualify for the tax concession the fund must be validated by the HKMA. With some expectation a gain on an investment in a public company or from any other non.

A fter years of lobbying with the government of the Hong Kong Special Administration Region Hong Kong SAR government and the Hong Kong Inland Revenue Department IRD the tax concessions for carried interest are now effective retrospectively from April 1 2020. Received a preferred return at an annual rate of 6 compound interest that would also be considered carried interest. Qualifying carried interest broadly includes carried interest received from.

The Bill will be. That is where an entity that is recipient of the carried interest return pays part of the return to its employees that payment will be concessionally taxed. January 11 2021.

The concessional tax treatment for carried interest is now effective from 1 April 2020 and will provide for a 0 tax rate for qualifying carried interest. The New Law applies to eligible carried interest received or accrued on or after 1 April 2020. Specifically the carried interest must arise from a tax-exempted qualifying transaction in the shares stocks.

On 7 May 2021 the Inland Revenue Amendment Tax Concessions for Carried Interest Ordinance 2021 the Amendment Ordinance was enacted into law.