Hong Kong funds, family offices and carried interest: tax bill nears passage
9 Oct 2026
Country reference
- Country: Hong Kong (planned expansion country)
- Authorities: Inland Revenue Department (IRD); Financial Services and the Treasury Bureau (FSTB)
- Topic: Preferential tax regimes for funds, family-owned investment holding vehicles (FIHVs) and carried interest
- Key date: Bill gazetted 12 June 2026; second reading expected second half of 2026
- Law: Inland Revenue (Amendment) (Preferential Tax Regimes for Funds, Family-owned Investment Holding Vehicles and Carried Interest) Bill 2026
What the bill does
- Widens the definition of fund and the range of qualifying investments.
- Removes the 5% threshold for incidental transactions.
- Relaxes the exemption rules for special purpose entities, including family-owned ones.
- Adds tax reporting and economic substance requirements to the unified fund exemption, similar to FIHVs.
Carried interest
- The concession extends beyond private equity to other eligible fund profits, for profits tax and salaries tax.
- Carried interest must depend on investment performance, be non-discretionary, and arise from investment management services provided in Hong Kong.
- Proprietary trading businesses using their own capital are not funds and do not qualify.
- Qualifying employees may receive carried interest through other entities.
Status
The bill was gazetted on 12 June 2026. On 12 August the Government said the Bills Committee had finished its review and that it aimed to resume the second reading debate in the second half of 2026. If passed, the measures apply from the 2025/26 year of assessment.
What to do now
- Fund managers: review carry arrangements against the new conditions.
- Family offices: check FIHV substance and the new SPE rules.
- Watch the Legislative Council agenda for the second reading.
Our take
Retroactive effect to 2025/26 matters: structures set up now can benefit for the current year. For Gulf families comparing Hong Kong with Singapore or Dubai, the regime becomes broader, but substance still decides.
Sources
Important. This summary is for general information and is not tax, legal or financial advice. It is based on public Inland Revenue Department publications and may be incomplete or out of date. The official legislation and guidance prevail; check the official text before acting. This article covers Hong Kong only. Last reviewed 9 Oct 2026.