Tax

Overview

Hong Kong is known for being a tax friendly jurisdiction due to its low profits tax rate. However, Hong Kong has been increasingly drawn into global tax initiatives aimed at combatting tax avoidance and achieving tax transparency. As a result, the need to understand tax liabilities, the benefits of planning to minimize these liabilities and the ability to defend any such plans has become ever more important.

As a law firm, we offer a number of distinct advantages over accountancy firms in the provision of tax advice. First, our tax advice is protected by legal professional privilege, meaning that our clients can be assured that their communications with us and our advice to them will not be subject to compelled disclosure. In contrast, no privilege attaches to tax advice received from accountancy firms, meaning that ultimately, the tax authorities can compel clients to disclose the advice received as well as the instructions given in formulating that advice. The availability of legal professional privilege means that our clients can rest assured that any information they disclose to us, no matter how sensitive, will remain confidential and unavailable to tax authorities seeking to understand the motivations for particular structures and activities.

Secondly, our tax advice is premised on a sound understanding of the principles of statutory interpretation and the overall legal framework in which tax laws operate. As a result, we have the ability to understand the law as a court would and are not bound to the interpretations of the law made by the Inland Revenue Department ("IRD"). Consequently, in both the tax planning context as well as in the context of tax related enforcement action by the IRD, we are able to assess the likelihood of IRD positions being successfully challenged.

Thirdly, in tax related enforcement action, whether in the form of IRD enquiries, audits or investigations and whether before the IRD or through the Board of Review or the courts, we are able to bring our wider litigation and advocacy skills into play. This enables us to provide a more well rounded approach to tax controversies.

Our tax practice complements our financial services practice, enabling us to bring a strong commercial background and a solid understanding of the corporate and commercial law principles in which financial institutions operate in advising on tax issues affecting them.

Experience

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  • Counsel to a Northern American based private equity fund sponsor managing over USD12 billion in private equity, private credit and infrastructure investments on a capital raising exercise in Hong Kong

  • Counsel to an Asian based hedge fund with over USD100 million of assets under management in respect of the structuring of derivative trading activities to limit tax liabilities

  • Counsel to an Asian based multi-strategy private funds manager in relation to Hong Kong taxes in connection with the offering of a private equity fund

  • Counsel to a Northern American based private equity fund sponsor managing over USD12 billion in private equity, private credit and infrastructure investments on a capital raising exercise in Hong Kong

  • Counsel to an Asian based hedge fund with over USD100 million of assets under management in respect of the structuring of derivative trading activities to limit tax liabilities

  • Counsel to an Asian based multi-strategy private funds manager in relation to Hong Kong taxes in connection with the offering of a private equity fund

Awards

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  • Chambers & Partners

    Leading Practice

    Investment Funds

  • Chambers & Partners

    Leading Individual

    Investment Funds

  • Legal 500

    Recommended Practice

    Investment Funds

  • Chambers & Partners

    Leading Lawyer

    Investment Funds

  • Asialaw Profiles

    Leading Practice

    Investment Funds

  • Asialaw Profiles

    Market-Leading Lawyer

    Investment Funds

  • Asialaw Leading Lawyers

    Market-Leading Lawyer

    Investment Funds

  • Asialaw Profiles

    Highly Recommended

    Investment Funds

  • IFLR 1000

    Leading Practice

    Hedge Funds

  • IFLR 1000

    "Positively Ranked"

    Hedge Funds

  • IFLR 1000

    Leading Practice

    Retail Funds

  • IFLR 1000

    "Positively Ranked"

    Retail Funds

  • Who's Who Legal

    One of the World's Leading Practitioners

    Private Funds

  • Chambers & Partners

    Leading Practice

    Investment Funds

  • Chambers & Partners

    Leading Individual

    Investment Funds

  • Legal 500

    Recommended Practice

    Investment Funds

  • Chambers & Partners

    Leading Lawyer

    Investment Funds

  • Asialaw Profiles

    Leading Practice

    Investment Funds

  • Asialaw Profiles

    Market-Leading Lawyer

    Investment Funds

  • Asialaw Leading Lawyers

    Market-Leading Lawyer

    Investment Funds

  • Asialaw Profiles

    Highly Recommended

    Investment Funds

  • IFLR 1000

    Leading Practice

    Hedge Funds

  • IFLR 1000

    "Positively Ranked"

    Hedge Funds

  • IFLR 1000

    Leading Practice

    Retail Funds

  • IFLR 1000

    "Positively Ranked"

    Retail Funds

  • Who's Who Legal

    One of the World's Leading Practitioners

    Private Funds

Insights

  • Opening Bank Accounts: Duties of Banks in Hong Kong to Combat Tax Evasion

    Hong Kong money laundering laws require banks to assess the risk of tax evasion in evaluating bank account opening applications. Prospective customers applying to open bank accounts must exercise sensitivity in understanding how their overall profile looks objectively from a tax evasion perspective to a bank and must exercise care in managing the presentation of their profile.

  • Reminder: New Tax Exemption for Private Funds Commences on April 1, 2019

    With the gazetting on March 1, 2019 of the new Inland Revenue (Profits Tax Exemption for Funds) (Amendment) Ordinance 2019 (“Amendment Ordinance”), from April 1, 2019, the tax position of investment funds in Hong Kong will be governed by a new tax exemption (“Private Funds Exemption”). Though the new exemption is broadly similar to the exemption (“Offshore Funds Exemption”) previously relied upon, there are significant differences, including:

  • The New Private Funds Exemption: an Update on Discussions with the Inland Revenue Department

    The Inland Revenue (Profits Tax Exemption Amendment) Bill represents a major step forward in allowing private funds, including hedge funds and private equity funds, managed from Hong Kong to obtain exemption from profits tax. Amongst other things, the Bill will provide bright line tax certainty for open-ended fund companies. At the same time, the Bill will allow funds to maintain their tax residency in Hong Kong, meaning that such funds will no longer be required to undertake board activities outside of Hong Kong and will no longer be required to maintain directors resident outside of Hong Kong to qualify for tax relief. Finally, the Bill will provide greater flexibility for tax relief in the context of private equity investments both in and out of Hong Kong. The Bill is on track to come into effect in April, 2019 and discussions with the IRD to date suggest that the IRD will be helpful in construing the legislation for the benefit of the asset management industry.