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HK Govt Purportedly Reinforces Tax Checks on Private Equity, VC Funds
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The Hong Kong government is reinforcing tax checks on private equity and venture capital funds, Bloomberg reported. The Inland Revenue Department beefed up scrutiny on management fees and so-called carried interest for fund managers over the past 12-24 months. Some tax advisors noted a 50% surge in the number of funds seeking guidance on how to respond to inquiries from authorities during this period. Hong Kong views carried interest as a performance fee, taxed at approximately 15-16.5%, while management fees are subject to a corporate tax rate of 16.5%. The report cited a spokesperson from the Inland Revenue Department responding that the department's practice is to select high-risk cases for post assessment review, including audit and investigation, which applies to all taxpayers and industries. The spokesman furthered that there’s no step-up measure applied to investment managers. As long as it’s “commercially realistic” and no “hallmarks of tax avoidance”, the Department will not meddle with business arrangements regarding carried interest and fee allocation between funds and investment managers. AASTOCKS Financial News Website: www.aastocks.com |
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