A one-month consultation on exempting offshore funds from profits tax has been launched.

Secretary for Financial Services & the Treasury Frederick Ma said today the move will increase our attractiveness to offshore fund managers and further reinforce our status as an international financial centre.

The proposed amendments to the Inland Revenue Ordinance seek to exempt fund and non-fund entities resident outside Hong Kong from profits tax in respect of any income derived from transactions undertaken here through a broker or an approved investment adviser.

To prevent round-tripping by local funds, anti-avoidance measures are also proposed.

Mr Ma said: "This legislative amendment exercise will bring Hong Kong into line with major international financial centres such as New York and London where offshore funds meeting specific requirements are not subject to tax.

"Granting profits tax exemption to trading gains of offshore investors will help promote the development of the fund management industry in Hong Kong. We look forward to receiving market comments on the proposed legislative amendments." 

He also pledged that the Government will continue to work with the industry to identify other measures to enhance our competitiveness as a world-class asset management centre in the region.

Subject to the outcome of the consultation, the bureau will work towards an early introduction of the Inland Revenue (Amendment) Bill into the Legislative Council.

For details of the consultation paper, click here. All views and suggestions should reach the bureau by February 13.