Hong Kong moves to scrap tax on hedge fund performance pay

Hong Kong plans to submit a bill to the Legislative Council that would exempt eligible carried interest from tax for a broader range of alternative asset managers, extending a break that private equity managers already receive. The change would effectively remove taxes on some hedge fund employees’ performance-related income, which is now taxed at 15% to 16.5%, while management fees remain subject to the 16.5% corporate rate. The government would apply the exemption to corporations and individuals retroactively from April 1, 2025. The proposal is part of a wider effort to draw global firms and executives as Hong Kong tries to strengthen its standing as a financial hub.