LCQ20: Facilitating family offices to come to Hong Kong for development
Question by the Hon Chan Chun-ying :
In June 2021, Invest Hong Kong set up a FamilyOfficeHK team (“the team”) dedicated to promoting the development of Hong Kong as a prime family office hub in Asia. Moreover, the Financial Secretary proposed in the Budget delivered in February this year that tax concessions be provided for eligible family investment management entities managed by single-family offices, so as to enhance Hong Kong’s attractiveness as a family office hub. In this connection, will the Government inform this Council:
(1)of the structure and staffing establishment of the team;
(2)of the total number of family offices which the team has successfully assisted in establishing business presence in Hong Kong so far, and the details of the cases concerned;
(3)whether it has estimated how many additional family offices will be attracted to establish business presence in Hong Kong by the above tax concession measure; if so, of the details; if not, the reasons for that; and
(4)whether it has set quantitative performance indicators and a timetable for promoting Hong Kong as a family office hub in Asia; if so, of the details; if not, the reasons for that?
Reply by the Secretary for Financial Services and the Treasury, Mr Christopher Hui:
President,
Having consulted Invest Hong Kong (“InvestHK”), my reply to various parts ofthe question raised by Hon CHAN Chun-ying is as follows:
(1) & (2) The Financial Services and the Treasury Bureau provides financial resources to InvestHK for setting up a dedicated FamilyOfficeHK team which offers one-stop support services with a view to attracting global clients to set up family offices in Hong Kong. The dedicated team was set up in June 2021 and comprises eight investment support officers, including four investment promotion managers, a deputy global head and three overseas regional heads (based in the Mainland and Europe) to achieve the following objectives –
(a) nurturing Hong Kong’s family office ecosystem by bringing different stakeholders together, and actively promoting Hong Kong as a family office hub through targeted promotional efforts;
(b) delivering bespoke one-stop solution to facilitate local, Mainland and overseas investors in planning, managing and expanding their family offices in Hong Kong;
(c) coordinating liaison between family offices and regulators, government departments and other stakeholders, and connecting family offices with relevant professional associations, organisations and service providers, etc.; and
(d) conducting regular activities and exchange sessions with industry practitioners to collect latest market insights and opinions on family office matters.
To assist family offices with their operation in Hong Kong, the dedicated team remains in close dialogue with government departments and regulators such as the Immigration Department and the Securities and Futures Commission. InvestHK and the dedicated team have actively organised and participated in more than 80 seminars, conferences and industry events for family offices and the industry in Hong Kong, the Mainland and overseas. They range from networking events to provide socialising platform for the industry, workshops in partnership with industry organisations on topics of interest, to keynote speeches to promote Hong Kong’s competitive advantages as a family office hub.
The FamilyOfficeHK team is actively processing over 50 cases, and has successfully assisted at least 13 family offices to set up or expand their business in Hong Kong (including Mainland, European, ASEAN and North America family offices). Highlights of some of the successful cases can be found at the dedicated team’s website: https://www.familyoffices.hk/en/case-studies.html.
(3) & (4) When family offices decide where to set up their operations and locate their investments, tax treatment is often a key factor influencing their decisions. In order to provide tax certainty to family investment management entities (i.e. family-owned investment holding vehicles) (“FIHVs”) managed by single family offices and attract the latter to set up a presence in Hong Kong, the Financial Secretary announced in his 2022-23 Budget Speech the proposal to provide tax concession for eligible FIHVs managed by single family offices.
We have completed an industry consultation and are formulating legislative proposals to provide profits tax exemption for FIHV’s assessable profits earned from qualifying transactions. Our target is to introduce the amendment bill into the Legislative Council (“LegCo”) in the second-half of this year. Subject to the passage of the amendment bill by LegCo, the tax concession treatment will apply for any years of assessment commencing on or after 1 April 2022. The proposal would attract family offices to domicile in Hong Kong, thereby generating more demand for investment management and other related professional services, including financial, legal, and accounting services. It will also deepen Hong Kong’s funding pool and create more business opportunities for the financial services industry.
We believe the measures would help attract more family offices to set up in Hong Kong. Following the implementation of the tax concession regime, we will evaluate the effectiveness of the proposed regime more accurately by collect in relevant statistics on FIHVs’ operation in Hong Kong, including the number of full-time qualified employees of the FIHVs, the amount of operating expenditure incurred in Hong Kong by the FIHVs, and the assets under management of the single family offices.
We will monitor the work of the dedicated team and evaluate the effectiveness of the proposed tax concession regime mentioned above in developing Hong Kong as a family office hub. We will also continue to listen to the feedback of the industry and consider other facilitation measures which would enhance Hong Kong’s competitiveness as a family office hub.