FamilyOfficeHK, an organisation in Hong Kong, sets out the case for why the financial centre has so much to offer for family offices.
The following sponsored content comes from FamilyOfficeHK, and focuses on what it sees as the reasons why Hong Kong will thrive as a hub for family offices.
New capital investment entrant scheme
Hong Kong is a top Asian city where ultra-wealthy individuals maintain primary or secondary residences, with an estimated 15,175 such residents (1). Recently, the government made it clear to the public that it is keen on having more UHNW individuals and their families immigrate to Hong Kong and call Asia’s finest city their new home.
The HKSAR government in March 2023 unveiled a plan to introduce a new capital investment entrant scheme (CIES), which offers applicants and their family members residency in Hong Kong if they invest a certain sum of money in stocks or other investments. Christopher Hui, the Secretary for Financial Services, and the Treasury, provided details about the new CIES in December 2023 and believes that it will bring more business opportunities and high-quality job prospects to various sectors of the industry.
Under the new CIES, applicants must possess a minimum net asset of HK$30 million ($3.387) and invest at least HK$30 million in permissible assets, including investing at least HK$27 million in the permissible financial assets and non-residential real estate. Successful applicants can bring their dependents to Hong Kong and initially stay for up to two years. Upon expiry of the two-year period, they may apply for an extension of stay. They may, upon a period of continuous ordinary residence in Hong Kong of not less than seven years, apply to become Hong Kong permanent residents in accordance with the law. The HKSAR government plans to officially launch the new CIES and invite applications in mid-2024.
The scheme is expected to attract more high net worth individuals to Hong Kong and strengthen the asset and wealth management and related professional service sectors in the city.
The relocation process to Hong Kong is made easier through the new CIES. Hong Kong provides an appealing low tax regime and a competitive business environment, supported by excellent infrastructure that enhances professional endeavours. The dynamic markets in the city present numerous opportunities for business and professional growth. In addition, successful applicants can also enjoy Hong Kong’s cosmopolitan and vibrant lifestyle, encompassing natural beauty and exceptional cuisines. The city offers a remarkable combination of urban sophistication and extensive commercial prospects, ensuring a gratifying lifestyle for newly-accepted applicants.
Hong Kong’s tax regime: Low, simple, and
Hong Kong’s tax system is transparent, simple, and affordable, with a profits tax rate of 16.5 per cent for corporations and 15 per cent for unincorporated businesses, and no capital gains tax, dividend tax, inheritance tax, or sales tax (2).
Family offices can optimise their tax planning and compliance in Hong Kong, as the city has signed over 40 comprehensive double taxation agreements with other jurisdictions and has adopted the OECD standards on tax transparency and exchange of information (3).
Many family offices operating in Hong Kong also enjoy some new perks concerning taxes. On 10 May 2023, the Legislative Council of the HKSAR passed the bill for the concessionary tax regime for single family offices (4). It is a package of tax incentives intended to attract and encourage HNW individual families to set up family offices in Hong Kong and operate family-owned investment holding vehicles (FIHVs) from Hong Kong.
This is a much-anticipated development welcomed by the market to bolster opportunities in Hong Kong as a premier family office hub, enhancing the city's well-established position as an international asset management and wealth management centre.
Hong Kong’s world-class business environment and
Global family offices show interest in operating in Hong Kong because of its world-class business environment and infrastructure that supports their diverse needs.
Some of the key features of Hong Kong’s business environment and infrastructure are robust data privacy laws. Hong Kong protects the confidentiality and security of personal and business data with the Personal Data (Privacy) Ordinance, which sets out six data protection principles that regulate the collection, use, retention, disclosure, and disposal of personal data. Hong Kong also has strict laws against cybercrime, hacking, and unauthorised access to computer systems.
Family offices that relocate to Hong Kong can enjoy the city’s free flow of capital, information, and people. The city facilitates the movement of funds, information, and talent across borders, with no exchange controls, no restrictions on foreign ownership and boasts an open internet.
Hong Kong sets the bar in having a sound legal system in Asia. The common law system continues to be practised as constitutionally guaranteed, making the city the only common law jurisdiction within China. The HKSAR enjoys a high degree of autonomy under the principle of “one country, two systems.”
Hong Kong is full of talent and has a fast-growing, highly talented ecosystem to help family offices set up and expand in the city and beyond. In June 2023, the government launched the Network of Family Office Service Providers, a network of private banks, accountants, lawyers, trust companies and more to create mutual business opportunities and promote Hong Kong’s advantages to target markets (i).
Hong Kong: more impetus, more market
Hong Kong has a special role in China’s Guangdong-Hong Kong-Macao Greater Bay Area (GBA). It is strategically positioned as a bridge to network 10 other cities: Macao, Guangzhou, Shenzhen, Zhuhai, Foshan, Huizhou, Dongguan, Zhongshan, Jiangmen and Zhaoqing, each having its own characteristics and strengths to complement each other.
The GBA benefits greatly from its geographical proximity and interconnectedness. Situated within the region's "one-hour living circle,” Hong Kong enjoys convenient access to neighbouring cities, fostering cooperation, opening investment opportunities, and facilitating the exchange of talent and resources.
Being based in Hong Kong offers businesses gateway to the GBA,
which has a consumer base of over 86 million people with
industries that complement each other in many ways, including
capital, production, and scientific research (5).