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Legislative bill to introduce tax concession for carried interest gazetted
The Inland Revenue (Amendment) (Tax Concessions for Carried Interest) Bill 2021 (the Bill) was published today. The long-awaited Bill seeks to promote the development of private equity funds in Hong Kong by ushering in a 0% profits tax rate on eligible carried interest and excluding 100% of eligible carried interest from employment income for ascertaining the salaries tax liabilities. In essence, eligible carried interest for qualifying persons and qualifying employees (collectively, qualifying recipients) would be treated as non-taxable.
Subject to the passage of the Bill by the Legislative Council, the concessionary tax treatment will be effective retrospectively and apply to eligible carried interest received by or accrued to any qualifying recipient on or after 1 April 2020.
The eligibility criteria of the proposed tax concession are outlined and discussed in this alert.
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