Hong Kong Budget 2013 - 14

The Financial Secretary of the Hong Kong Special Administrative Region delivered the 2013/14 budget on 27th February 2013. Below are some of the proposed measures:

Fund and asset management

The Hong Kong government announced she will extend the profits tax exemption for offshore funds to include transactions in private companies which are incorporated or registered outside Hong Kong and do not hold any Hong Kong properties nor carry out any business in Hong Kong.  This measure will allow private equity funds to enjoy the same tax exemption as offshore funds, attracting more private equity funds to establish their platform in Hong Kong.

The government also considers legislative amendments to introduce the Open-ended Investment Company to be established in Hong Kong. This vehicle is an increasingly popular form used throughout the funds industry. This measure will help to attract more traditional mutual funds and hedge funds to domicile in Hong Kong.

Insurance business

The Hong Kong government reduces the profits tax on the offshore insurance business of captive insurance companies, such that they will enjoy the same tax concessions as those currently applicable to reinsurance companies.  This measure will attract more enterprises to form their own captive insurance to insure against their business risks, and will promote the development of other related businesses, including reinsurance, making Hong Kong's risk management services more diversified.

One-time relief measures for businesses

A 75% profits tax rebate, capped at HKD 10,000, is proposed for the final tax payable for year of assessment 2012/13. It is also proposed to waive business registration fees for 2013/14.

These proposed changes are a step in the right direction to further strengthen Hong Kongs role as a regional funds industry   . But there is more the government can do to further enhance the competitiveness of Hong Kong as an international financial hub.