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Hong Kong To Ensure ITVF Tax Break For Offshore Investors

by Mary Swire, Tax-News.com, Hong Kong

27 April 2018


Hong Kong's Government has published a draft law preserving the profits tax exemption for offshore venture capital funds who participate in the island's new Innovation and Technology Venture Fund (ITVF).

The ITVF was set up by Hong Kong's Government in 2017 with the aim of encouraging more private investment in Hong Kong's innovation and technology start-ups. Under the ITVF, the Government will co-invest with selected venture capital funds in local innovation and technology start-ups at an overall ratio of about 1:2.

The draft law has been prompted by concerns from offshore venture capital funds that co-investing with the Government under the ITVF scheme could result in the loss of profits tax exemption status. Loss of this status could potentially mean a fund becoming liable to tax in Hong Kong on investment profits, whether arising within or outside Hong Kong, thereby acting as a disincentive to participating in the ITVF.

The draft law, Inland Revenue Ordinance (Amendment of Schedule 16) Notice 2018, is scheduled to be debated in Hong Kong's Parliament on May 2, 2018, and the intended start date is June 22, 2018.

TAGS: tax | investment | law | investment funds | international financial centres (IFC) | offshore | venture capital | Hong Kong

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