The Government today (March 24) issued the Policy Statement on Developing Family Office Businesses in Hong Kong (Policy Statement). It sets out the Government’s policy stance and measures on developing a vibrant ecosystem for global family offices and asset owners.
The Government announces the following policy measures with a view to creating a conducive and competitive environment for the businesses of global family offices and asset owners to thrive in Hong Kong.
1. A new Capital Investment Entrant Scheme (CIES)
Based on the original CIES, we propose the permissible assets for the scheme to include equities listed in Hong Kong; debts issued or fully guaranteed by companies listed in Hong Kong, by the Government, or by other corporations, agencies or bodies wholly or partly owned by the Government; subordinated debts issued by authorised institutions; and eligible collective investment schemes (including investment-linked assurance scheme (ILAS)). Besides assets denominated in Hong Kong dollar, assets denominated in RMB will also be considered. Upon approval, applicants may reside and pursue development in Hong Kong along with his/her spouse and dependant unmarried children. Details of the Scheme will be announced later.
2. Offering tax concessions
Subject to approval by the Legislative Council, profits tax exemption will be provided to family-owned investment holding vehicles (FIHVs) managed by single family offices in Hong Kong. The Government will also further review the existing preferential tax regimes for funds and carried interest.
3. Market facilitation measures
The Securities and Futures Commission (SFC) has recently issued a few quick reference guides to address frequently-asked questions about licensing requirements, with one specifically catering for family offices. It has also set up a dedicated communication channel maintained by its licensing team for family office related enquiries both by e-mail or telephone. Having due regard to investor protection, our regulators will introduce a set of more risk-based measures to streamline intermediaries’ suitability assessment and disclosure process for sophisticated or ultra-high-net worth individual clients.
4. The Hong Kong Academy for Wealth Legacy
The Government will fund the setup of a new Hong Kong Academy for Wealth Legacy under the Financial Services Development Council. It will be supported by partnerships with the industry, professional service providers, universities, and the dedicated FamilyOfficeHK team under Invest Hong Kong (InvestHK). It will offer talent development services to industry practitioners and next-generation wealth owners, with a view to cultivating a deep talent pool for the family office sector in Hong Kong.
5. Art storage facilities at the airport
The Hong Kong Airport Authority is actively exploring the establishment of storage, display and appreciation facilities for art and treasures at Hong Kong International Airport, as part and parcel of the Airport City development. It will enable global family offices with capital allocation in art to benefit from the thriving art ecosystem in Hong Kong.
6. Hong Kong as a philanthropic centre
Our goal is to develop Hong Kong into a philanthropic centre for global family offices and philanthropists to deploy charitable capital benefiting Hong Kong, the Mainland and the overseas. We will enhance the processing of applications for recognition of tax exemption status of charities. The Inland Revenue Department (IRD) will devise a standard form to facilitate the submission of applications and streamline processing. The IRD will also provide further guidance for applicants to facilitate precise statement of charitable objects. For tax exemptions offered to FIHVs managed by single family offices in Hong Kong, we plan to enhance the legislative proposal by expanding the extent of beneficial interest that an exempted charity may hold in an FIHV.
7. The dedicated FamilyOfficeHK team in InvestHK
To step up our efforts in facilitating global family offices to set up and expand in Hong Kong, the dedicated FamilyOfficeHK team will expand its role to also cover services like facilitating philanthropic endeavors of wealth owners and assisting in education related matters.
8. A new Network of Family Office Service Providers
The FamilyOfficeHK team under InvestHK will convene and launch a new Network of Family Office Service Providers, covering private banks, accounting and legal firms, trusts and other professional services firms, which provide comprehensive services to family offices. The network will provide a two-way channel between the Government and the industry to communicate on the latest policy development, and mobilise the industry’s global network to advocate and promote the opportunities in Hong Kong for family offices.
The full policy statement can be found in the Annex.
The Financial Secretary, Mr Paul Chan, said, “The Policy Statement demonstrates our determination to develop Hong Kong into a leading global family office hub. Developing family office business will be conducive to pool capital from around the world in Hong Kong, bolster our financial market as well as asset and wealth management industry. It will also promote the sustainable development of Hong Kong’s financial and professional services, innovation and technology, green, arts and culture and philanthropy, creating strong impetus for Hong Kong’s growth.”
The Secretary for Financial Services and the Treasury, Mr Christopher Hui, said, “The measures announced in the policy statement represent the holistic offerings of Hong Kong for global family offices and asset owners. The attractiveness of Hong Kong goes beyond our role as an investment and financing centre, and the policy measures are formulated to showcase the full charm of Hong Kong as an international cosmopolitan city from multiple dimensions. With that we will further strengthen the vibrant ecosystem for global family offices and asset owners in Hong Kong.”