Hong Kong Aims to Boost Crypto Investment with Tax Exemption Measures
Hong Kong is positioning itself as a global crypto hub by exempting taxes on crypto for private equity and hedge funds.
This will attract foreign capital and compete with Singapore and Luxembourg.
Patrick Yip, Vice Chair and International Tax Partner at Deloitte China, says the exemption will bring “clarity” to family offices and investors who already put up to 20% of their portfolio into digital assets.
Hong Kong government is also proposing to expand the tax exemption to include investments in private credit, overseas property and carbon credits, making it even more attractive to global investors.
Following Global Trends in Crypto Policy
Hong Kong’s move comes at a time when global crypto tax reforms are underway. Italy has just reduced its crypto tax rate from 42% to 28% and Trump’s administration is reportedly working on crypto tax exemption in the US to boost the domestic digital asset industry.
Darren Bowdern, Head of Asset Management Tax for Asia at KPMG, says these changes will put Hong Kong at the level of Singapore or Luxembourg so funds won’t have to pay unnecessary tax. With stablecoin firms like Circle looking to expand into the region, Hong Kong will be a key player in the crypto space.
Aiming for Offshore Financial Leadership
With scrutiny in Singapore and restrictive policies in mainland China, Hong Kong is becoming a safe haven for high net worth individuals and crypto firms. UBS CEO Sergio Ermotti said Switzerland’s wealth management supremacy is at risk and Hong Kong is a serious contender.
The six-week consultation period has already generated a lot of interest in Hong Kong’s crypto tax exemption proposals. As clarity increases, Hong Kong will soon be competing with established offshore hubs and attracting institutional and retail crypto investors looking for a good deal.
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