Hong Kong OFCs: The Alternative to the Cayman Islands for Hedge Funds
Recent changes in Hong Kong and the Cayman Islands make Hong Kong OFCs a compelling alternative to Cayman SPCs for hedge funds
We are one of a few Hong Kong law firms who advise on Hong Kong tax laws and tax issues affecting hedge funds and their managers. Our work in this area complements our leading practices in hedge funds and investment funds, for which we have been internationally recognized by the International Financial Law Review 1000 (IFLR1000), the Legal 500, Chambers and Partners and Asialaw Profiles.
Our work includes advising on the following:
advising hedge fund managers on managing tax liabilities of hedge funds managed from Hong Kong, including liability for Hong Kong profits tax under the Inland Revenue Ordinance (“IRO”) and the availability of profits tax exemptions under the offshore funds exemption and the private funds exemption (also known as the “unified funds exemption”) under the unified tax exemption regime of the Inland Revenue Department (“IRD”)
advising hedge fund managers on available options to limit their overall tax liabilities in Hong Kong, including in respect of profits tax on the management entity and salaries tax on the individual portfolio managers and other key personnel arising from management fees and performance fees, taking into account anti-avoidance provisions of the IRO, the base erosion and profit shifting (“BEPS”) measures incorporated into the IRO, the different approaches under the IRO to taxation of profits, salaries and dividends and available exemptions under the IRO
helping hedge fund managers understand the classification of capital gains for tax purposes
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Recent changes in Hong Kong and the Cayman Islands make Hong Kong OFCs a compelling alternative to Cayman SPCs for hedge funds
Prime brokers and other SFC Type 1 licensed brokers can now act as custodians of private OFCs under new SFC rules.
DIPN 61 provides guidance on applying the Unified Funds Tax Exemption to exempt OFCs and LPFs from Hong Kong profits tax
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