Taxation of Private Equity

Overview

We are one of a few Hong Kong law firms who advise on Hong Kong tax laws and issues affecting private equity fundsand their advisers. Our work in this area complements our leading practices in private equity 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 general partners (“GPs”) on tax efficient structures for providing advisory and management services to the funds sponsored by them, including advising on corporate structure, the classification of income as capital gains as well as the allocation of carried interest, management fees and other fees taking into account transfer pricing tax considerations under general anti-avoidance provisions (“GAAR”) and base erosion profit shifting (“BEPS”) provisions under the Inland Revenue Ordinance (“IRO”) the different approaches under the IRO to taxation of profits, salaries and dividends and the availability of tax exemptions

• advising private equity sponsors and investors on the structure of private equity funds and the structure for investing into private equity to ensure whenever possible the tax efficient distribution of gains and losses from investments to limited partners (“LPs”)

• advising private equity sponsors on the form of investment in portfolio companies and the holding structure for private equity investments, including the use of special purpose entities (“SPEs”) to achieve tax efficient upstream distribution of income, whether in the form of interest, capital gains, dividends or otherwise, and losses from private equity investments and the use of comprehensive double taxation agreements (“CDTA”) and other tax treaties entered into by Hong Kong and other jurisdictions, as well as the Hong Kong approach to taxation of interest and dividends