Xu Zhengyu: Hong Kong authorities propose to broaden the eligible asset categories to virtual assets, etc., so that such transactions can be exempted from profits tax

According to financial reports, on October 21st, Hong Kong's Secretary for Financial Services and the Treasury, Eddie Hui, stated on his blog "Caiku Lun" that the government plans to optimize the tax incentives currently provided to the asset and wealth management industry in multiple ways, taking the Rio Tinto market to the next level. In terms of expanding the categories of eligible assets, Xu Zhengyu stated that the authorities propose to broaden the categories of eligible assets, in line with the overall financial development strategy of the Treasury, by adding carbon emission derivatives/emission allowances, insurance linked securities, loans and private equity investments, and virtual assets, so that transactions of such assets can also be exempted from profits tax. On the other hand, it is recommended that anyone operating financial institution business, insurance business, or money lending business in Hong Kong, if holding 10% or more of the beneficial equity of the fund at the same time, will be deemed to have obtained taxable profits from the fund's income from loans or private equity investments. If the fund is an associate of that person, any percentage of beneficial equity applies. Next, the Finance and Treasury Bureau will release a consultation document on the overall proposal, collect and analyze opinions, propose relevant legal revisions to implement various optimizations, and add momentum to the development of the industry.