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In February, the Hong Kong Financial Secretary John Tsang announced an intention to extend the profits tax exemption for offshore funds to include transactions in certain private companies with the aim of encouraging the private equity in Hong Kong. The changes have the potential to be of use for non-listed real estate funds operation in Hong Kong and may potentially simplify many of the current protocols fund managers have in place to ensure that they do not end of generating Hong Kong sourced Income.
 
On 18 November, the Financial Services Development Council (FSDC) issued a new research paper setting out its thoughts on how the changes may work. The paper has been submitted to the government and is likely to be taken into consideration in drafting the legislation. The paper considers a number of issues, including exclusions for Hong Kong real estate holdings, the extension of the exemption to SPVs owned by a qualifying fund, and the need for the transactions to be undertaken by regulated entities. While a lot of remains unclear at this stage, it is clear that industry lobbying has been heard and the FSDC has at least acknowledged some concerns.
 
This presentation recaped the existing tax situation for Hong Kong based real estate funds, examined the current state of the changes proposed by the Financial Secretary and the FSDC and discuss their potential impact and shortfalls in the context of real estate investment.
 

Presentation file is available for ANREV members to download by log in to the publication page.

Speaker

Mr. Chris Abbiss, Head of Real Estate Tax, Real Estate and Construction, KPMG

Chris has extensive experience on tax issues in the property and infrastructure industries. He advises a number of significant funds and investment advisors on fund structuring, the structuring of Pan Asian real estate investments, and efficient investment management structures. His 20 years in tax practice include experience in New Zealand and the UK as well Hong Kong.