Hong Kong plans to exempt private equity funds, hedge funds and the investment vehicles of the super-rich from paying tax on gains from cryptocurrencies, private credit investments and other assets, as the city strives to become a top offshore finance hub, the Financial Times<reported on Thursday.

In a 20-page proposal, which was circulated this week and seen by the Financial Times, the Hong Kong government said taxation is “one of the key considerations” for asset managers when deciding where to base their operations and it wanted to create a “conducive environment” for them.

Hong Kong has been stepping up efforts to promote itself as a center for crypto businesses. Bitcoin has surged since Donald Trump won the US presidential election this month, with investors betting his return to the White House will boost the crypto industry.

The government wants to expand the range of tax-exempt investments to also include private credit, overseas property and carbon credits, according to the proposal. It is running a six-week consultation on the plans.

The proposal also comes as regional rivals Hong Kong and Singapore are fighting to boost their position as top offshore finance destinations.

According to the report, Hong Kong is also competing with Singapore to attract investors launching funds. Fund launches in the Chinese territory have been slower than in Singapore, according to official data.

Hong Kong has been promoting the “open-ended fund company”, low-tax legal structures that can hold a pool of assets and multiple sub-funds, according to the Financial Times. As of October, investors have launched more than 450 of such funds, according to data from the city’s government.

Singapore in 2020, introduced the variable capital company, a new corporate structure for investment funds. There are more than 1,000 of the funds in the Southeast Asian country, the report added.

According to Reuters, Hong Kong is Asia’s largest hedge fund hub and ranked second in terms of capital under management in private equity funds, official data shows.

There are more than 2,700 single‑family offices operating in the city, over half of which have assets of more than $50 million, according to Hong Kong government estimates, citing market data.

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