KPMG: Hong Kong Fund Tax System Welcomes Major Reform and Expected to Attract a New Round of Global Asset Management Companies to Settle.

On July 22, KPMG released its latest "Hong Kong Asset Management and Private Equity Outlook" report, pointing out that the reform of the fund tax-free system and the accompanying equity tax reduction system is expected to attract a new wave of regional and global asset management companies to set up in Hong Kong. KPMG predicts that the total IPO fundraising in Hong Kong for the whole year is expected to reach around HK$350 billion. The Hong Kong capital market also shows strong momentum. Hong Kong is expected to reclaim the title of the world's largest IPO fundraising in 2025, and the upward trend will continue to 2026, with the current fundraising scale still ranking among the top two in the world. The report also points out that ETFs will become an important growth engine for the asset management industry in Hong Kong, with the average daily turnover of Hong Kong ETFs reaching HK$39.6 billion in the first half of this year, a 17% increase from the same period last year. Bao Diyun, head of alternative investments at KPMG China's Hong Kong Special Administrative Region, said that by providing a 0% actual tax rate on performance fees with retroactive equity, Hong Kong further eliminates uncertainties in the existing tax system, and enhances the attractiveness of setting up and operating investment platforms for private equity, private credit, and hedge funds in Hong Kong. It is expected that these measures will attract more international asset management institutions to establish long-term investment teams in Hong Kong, and use Hong Kong as an important base for managing high-value investment portfolios in Asia.