Hong Kong offers a range of incentives that cater to the economic objectives of the Special Administrative Region (SAR). These incentives are open to various business groups, including family offices and small enterprises, to foster robust economic growth and development within the region.
Hong Kong tailors incentives to boost targeted industries and align investment with its strategic objectives, strengthening its economy.
Incentives for family offices
Under the new scheme, a single-family office can be exempted from licensing under the Securities and Futures Ordinance (SFO) if it does not conduct business in Hong Kong; or perform any regulated activities.
The regulated activities include:
- Dealing in securities;
- Dealing in futures contracts;
- Leveraged foreign exchange trading;
- Advising on securities;
- Advising on futures contracts;
- Advising on corporate finance;
- Providing automated trading services;
- Securities margin financing;
- Asset management;
- Providing credit rating services.
The specifics of it will need to be determined by reference to the facts of each case, including:
- The person is performing an occupation or a duty that requires attention; the activity involves continuity;
- The activity is capable of making a profit; and
- The activity was carried out to make a profit.
However, two carve-outs could exempt a family office from licensing for asset management under the SFO, where the first applies to services provided exclusively to the office’s group company regarding the group’s assets, and the second pertains to activities connected to the trust service of a registered entity under the Trust Ordinance.
Below are the new measures designed to attract family offices to Hong Kong.
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Incentives and Supportive Measures for Family Offices in Hong Kong |
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Capital Investment Entrant Scheme (CIES) |
Under this scheme, permissible assets will include equities listed in Hong Kong, debts issued by companies listed in Hong Kong, subordinated debts issued by authorized institutions, and eligible collective investment schemes. Approved applicants can reside and pursue development in Hong Kong with their spouse and dependent unmarried children. |
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Tax concessions |
Profits tax exemption will be provided to family-owned investment holding vehicles (FIHVs) managed by single-family offices in Hong Kong. The government will also review the preferential tax regimes for funds and carried interest. |
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Market facilitation measures |
These include the licensing requirements of the Securities and Futures Commission (SFC), particularly those catering to family offices. The regulatory body has established a dedicated communication channel maintained by its licensing team for family office-related inquiries. |
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The Hong Kong Academy for Wealth Legacy |
The government will fund the setup of a new academy under the Financial Services Development Council, offering talent development services to industry practitioners and next-generation wealth owners. |
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Art storage facilities at the airport
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The Hong Kong Airport Authority is actively exploring storage establishment, display, and appreciation facilities for art and treasures at Hong Kong International Airport as part and parcel of the Airport City development. It will enable global family offices with capital allocation in art to benefit from the thriving art ecosystem in Hong Kong. |
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Hong Kong as a philanthropic center |
Enhance the processing of applications for recognition of the tax exemption status of charities. The Inland Revenue Department (IRD) will devise a standard form to facilitate the submission of applications and streamline processing. The IRD will also provide further guidance for applicants to facilitate precise statements of charitable objects. For tax exemptions offered to FIHVs managed by single-family offices in Hong Kong, enhance the legislative proposal by expanding the extent of beneficial interests that a charity may hold in an FIHV. |
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A dedicated FamilyOfficeHK team in InvestHK |
The dedicated FamilyOfficeHK team will expand its role to cover services like facilitating philanthropic endeavors of wealth owners and assisting in education-related matters. |
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A new Network of Family Office Service Providers |
The FamilyOfficeHK team will convene and launch a new network of family office service providers, providing a two-way channel between the government and the industry to communicate on the latest policy developments. |
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Source: The Government of the Hong Kong Special Administrative Region website. |
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Tax incentives
Hong Kong's tax landscape is characterized by a generally low-tax environment with specific incentives tailored to different sectors. While the region does not provide extensive tax incentives for all companies, it benefits critical industries such as aviation services, financial services, and the shipping sector. Offshore funds that meet specific criteria can also be exempt from profits tax.
Hong Kong has implemented a two-tier tax profits tax system, where the first HK$2 million (US$255,000) of assessable profits for qualified enterprises is taxed at a reduced rate of 8.25 percent rather than the standard 16.5 percent. This system aims to ease the tax burden on smaller businesses.
Hong Kong offers 45 funding schemes across various industries to support economic growth and SMEs. The SME ReachOut service team assists in identifying eligible schemes and navigating the application process, spanning various industries and business operations, each designed to address specific business needs and promote growth. Popular schemes include:
- The Dedicated Fund for Branding;
- Export Marketing Fund (EMF);
- Technology Voucher Programme (TVP); and
- The Enterprise Support Scheme.
Additionally, Hong Kong uses tax incentives to attract investment across sectors. These incentives encompass 100 percent write-offs for new expenditures on manufacturing machinery, exemptions for capital expenditures related to environmental protection and intellectual property rights, and reduced profit tax rates for the aviation industry. The region also encourages research and development activities by offering businesses 100 percent standard tax deductions for payments to educational and research institutions engaged in R&D efforts. Hong Kong's tax policies aim to support various industries, stimulate economic growth, and promote innovation.
