Hong Kong is planning to waive tax on investment gains from cryptocurrencies and other alternative assets for hedge funds, private equity funds, and eligible family offices as part of its strategy to strengthen its position as a wealth management hub.
In a consultation paper distributed this week and seen by Reuters, the Financial Services and the Treasury Bureau proposed extending capital gains tax exemptions to include overseas properties, carbon credits, private credit, virtual assets and other alternative investments. The exemptions would apply to privately offered funds and qualifying single family office investment vehicles.
"Taxation is one of the key considerations for the wealth asset management sector to decide where to base their operations," the proposal stated, emphasising the government’s commitment to fostering a favourable environment for the wealth management industry.
Global hub for digital assets
First reported by the Financial Times, the proposal aligns with Hong Kong’s efforts to position itself as a global hub for digital assets and attract new capital amid ongoing geopolitical and economic tensions between China and the West.
Bitcoin’s recent rally toward the US$100,000 threshold underscores renewed interest in cryptocurrencies, buoyed by expectations of regulatory clarity under the incoming US administration.
Hong Kong remains Asia’s largest hedge fund hub and ranks second for capital under management in private equity, according to official data. The city is also home to over 2,700 single family offices, more than half of which manage assets exceeding US$50 million, according to government estimates.
The consultation paper further suggested extending tax exemptions to include pension and endowment funds, broadening the appeal for institutional investors.