Carried Interest Tax Concession - Tax – New tax Available, Act Fast

A ”qualifying payer” is any of the following: Eligible carried interest will be taxed at 0%.

On 7 may 2021, the inland revenue (amendment) (tax concessions for carried interest) ordinance 2021 (the amendment ordinance) was enacted into law.

Carried interest tax concession. The regime operates to provide tax concession at both the salaries tax and profits tax levels. Hong kong introduces new carried interest tax concession introduction and summary as part of a longstanding government policy to attract private equity (“ pe ”) and investment fund operations to hong kong, the inland revenue (amendment) (tax concessions for carried interest) bill 2021 (the “ bill ”) was gazetted on 29 january of this year. 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.

Application can be made to the hkma for each year of assessment in which the eligible person wishes to claim the carried interest tax concession. Pe funds to opt for the new tax concession to obtain certainty of the carried interest tax treatment. Qualifying carried interest payer 8.

Qualifying carried interest broadly includes carried interest received from gains from investments in private companies. The fund must be certified by the hkma (“certified Eligible carried interest will be taxed at 0%.

We propose that tax concession would only apply to eligible s carried interest distributed by a fund which falls within the meaning of “fund” under section 20am of inland revenue ordinance (cap. 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 from employment income for the calculation of. Subsequent to the industry consultation in august last year, the hong kong government published on 28 january 2021 the inland revenue (amendment) (tax concessions for carried interest) bill 2021 (the bill) for first reading in the legislative council on 3 february 2021.

Furthermore, the proposal clarifies that 100% of eligible carried interest would also be excluded from the employment income for the calculation of the investment professional’s salaries tax. 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. 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”).

The bill provides concessional tax treatment for carried interest, effective from 1 april 2020, and a 0% tax rate for “qualifying carried interest.” qualifying carried interest broadly includes carried interest received from gains from investments in private companies. For carried interest to qualify for the concession, the underlying investments from which the carried interest is distributed must also comply with the same conditions governing exemption from tax. The proposal did not specify the concessionary tax rate.

In august, 2020, the hong kong government provided high level details of its proposal to offer a tax concession to the private equity industry for carried interest earned in hong kong from hong kong private equity funds, meaning a fund which is managed in hong kong. Hong kong enacts tax concessions for carried interest executive summary hong kong enacted the inland revenue (amendment) (tax concessions for carried interest) bill 2021 (the new law) on 7 may 2021. 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.

Following the industry consultation from august to september 2020 on the initial proposals for hong kong’s carried interest tax concession regime, the legislative council panel on financial affairs met on 4 january 2021 to discuss the legislative proposals before the amendment bill is introduced to the legislative council in february 2021. 1 the new law provides a tax regime offering tax incentives for eligible carried interest of qualifying persons and qualifying employees. The tax concession regime for carried interest distributed by eligible private equity funds operating in hong kong, alongside the enhancements to the profits tax exemption that was initially introduced in april 2019, offer additional strong incentive and an attractive tax framework for fund operators to establish and operate private equity funds in hong kong, while.

The regime operates to provide tax concession at both the salaries tax and profits tax levels. To introduce a tax concession for carried interest. To apply for certification, a fund has to submit to the hkma a completed “certification application form” and the required supporting documents, including an auditor’s report.

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