Hong Kong government is considering a crypto tax exemption for equity and hedge funds in response to the strong industry push after Donald Trump’s victory.
Hong Kong has announced plans to exempt cryptocurrency taxes for private equity funds, hedge funds, and other investment vehicles aimed at high-net-worth individuals (HNIs).
This initiative is part of the region’s strategy to attract foreign capital and solidify its position as a financial and cryptocurrency hub in Asia.
Notably, the announcement coincides with reports of Donald Trump planning significant crypto tax exemptions in the U.S.
Hong Kong’s Crypto Tax Exemption Plan Mirrors Trump’s Vision
The Hong Kong government highlighted that crypto taxation is a key factor for asset managers deciding where to base their operations. By addressing this, Hong Kong aims to create a “conducive environment” to attract capital flows and investments.
Over the last two years, Hong Kong has introduced various measures to establish itself as a center for crypto activities.
This development aligns with the Trump administration’s reported efforts to implement crypto-friendly policies, including appointing supportive lawmakers. Donald Trump is reportedly considering a crypto tax exemption if he resumes office in January.
Patrick Yip, vice chair and international tax partner at Deloitte China, stated that Hong Kong’s proposed tax exemption measures could provide “certainty” for family offices and investors.
He explained, “This is an important step in boosting Hong Kong’s status as a financial and crypto trading hub.” Currently, some family offices in Hong Kong allocate up to 20% of their portfolios to digital assets, which Yip described as “not insignificant.”
Globally, other countries are also adapting their tax policies to attract crypto capital. For example, Italy recently reduced its cryptocurrency tax rate to 28%, down from the previously proposed 42%.
Hong Kong’s Path Toward Becoming a Global Tax Haven
The Hong Kong government has also proposed broadening tax-exempt investments to include private credit, overseas property, and carbon credits. A six-week consultation period has been initiated to advance the proposal.
Amid restrictive policies in mainland China under Xi Jinping, wealthy Chinese investors are moving their wealth management activities abroad.
While Singapore has been a popular destination, its recent crackdown on money laundering and stricter due diligence requirements have slowed the establishment of new family offices.
Hong Kong is looking to capitalize on this shift and position itself as a leading offshore financial hub.
Crypto firms like Circle are reportedly considering expanding to Hong Kong, pending stablecoin regulatory clarity.
Darren Bowdern, head of asset management tax for Asia at KPMG, told the Financial Times: “These changes are designed to put Hong Kong on a par with Singapore or Luxembourg, in that there’s no risk of the fund being subject to tax.”
Earlier this year, UBS CEO Sergio Ermotti warned that Switzerland could lose its status as the world’s leading wealth management hub to Hong Kong.
