business development officer, APAC | CSC Global Financial Markets
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As wealth in the APAC region continues to grow—with high-net-worth individuals specifically increasing by 7.6% to 6.5 million in 20191—Hong Kong is fast becoming an important hub for single and multifamily offices. A confluence of factors is driving the interest. Mirella Nielsen, business development officer, shares her perspective on why Hong Kong is so well positioned.
Favorable governmental initiatives
The government launched three key initiatives in 2020, reinforcing Hong Kong’s position as a key financial centre and supporting a promising family office environment.
- • The Family Office Association Hong Kong was formed, encouraging communication and cooperation between the family office industry and the government.
- • The Securities and Futures Commission (SFC) issued a circular that clarified licensing requirements for single and multifamily offices, and followed up with FAQs for additional guidance.
- • The introduction of the Limited Partnership Fund (LPF), aimed at encouraging private equity and venture capital funds to domicile in Hong Kong, will be attractive investment options for family offices.
Hong Kong offers a tax-friendly system to individuals and businesses. First, there is no investment withholding tax, capital gains tax, estate duty, wine duty, or tax on dividends or interest from savings. Secondly, Hong Kong has a two-tiered profit tax system with the first HKD 2 million of profit earned taxed at 8.25% and the remaining at 16.5%. Finally, in addition to an already low corporate tax rate, as of January 2020, Hong Kong holds 43 double taxation agreements2. This enables family offices to utilize favourable withholding tax rates for trade and investments across borders.
Professionals with skills and capabilities
Hong Kong has a large pool of skilled investment, legal, risk, and accounting professionals to support the demands of family offices. According to a report by InvestHK issued in early 2021, there are more than 42,000 practitioners in the asset and wealth management business, 45,000 or more certified public accountants, and more than half of the Global 100 law firms have a presence in Hong Kong3.
Situated firmly in the Greater Bay Area (GBA), Hong Kong is strategically located to take advantage of the soaring wealth. With a population of more than 70 million people and a combined GDP of USD 1.6 trillion, the GBA is considered one of the most affluent regions in China. A report published by Deloitte and CPA Australia cites that the GBA is home to more than 450,000 HNW families with more than RMB 6 million of investable assets4. Confidence is so high that authorities in Mainland China, Hong Kong SAR, and Macao SAR launched “Wealth Management Connect” last year to facilitate sales of wealth management products within the GBA.
How CSC can help
Whether a single or multifamily office, fund, or corporation, CSC offers a suite of administration services, including fund, corporate secretarial, HR and payroll administration, corporate accounting, as well as tax-filing matters.
With more than 120 years of global experience and 40 years in the APAC region, our experts understand the markets, the regulations, and most importantly, the nuances of each jurisdiction’s culture to help your business sustain its momentum and preserve your wealth and family succession.