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KPMG Asset Management Series

Proposed 0% tax rate for eligible carried interest payments

Proposed 0% tax rate for eligible carried interest payments

12:15 – 13:30, 22 January 2021

The long-awaited carried interest concession has been released by the Legislative Council Panel on Fiscal Affairs. The proposal is for a concessionary 0% tax rate for qualifying carried interest.

This is a ground-breaking development for the private equity industry in Hong Kong, further expanding on the incentives provided under the fund tax exemption provisions (unified fund exemption rules) for private equity and other alternative funds.  KPMG has been working closely with the industry and Government to push for a competitive carried interest framework that will help cement Hong Kong’s position as Asia’s leading PE hub, attracting new fund managers to establish operations in Hong Kong, and encourage existing funds to expand their operations here as well.

The carried interest concession will involve a certification of the carried interest arrangement by the Hong Kong Monetary Authority. An external auditor will also be required to verify that the substantial activities requirements imposed on the carried interest recipients are met and the distribution fulfils the conditions under the tax concession regime. This should bring integrity into the process and confidence over the operation of the regime for the PE industry.

The legislation for the proposed measures is targeted to be introduced into the Legislative Council later this month. 

In this webinar we will share with you:

  • The proposed framework on the tax concession, including conditions around eligible funds, qualifying transactions, carried interest recipients and the HKMA’s certification and on-going monitoring mechanism
  • Key issues or uncertainty under the proposed framework such as whether the carried interest arising from public investments could be eligible for tax concession
  • Practical examples of fund structures that could enjoy the tax concession

This session, which will cover the proposed 0% tax rate for eligible carried interest payments, will be the fifth instalment in the KPMG Asset Management Series. 

Should you have any queries, please contact Wing Cheung at +852 3927 5626.

Speakers

Darren Bowdern Head of Alternative Investments Hong Kong KPMG China

Sandy Fung Tax Partner, Alternative Investments Hong Kong KPMG China

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