Why Hong Kong is incentivising ultra-high-net-worth family offices
One of the most vibrant, connected and forward-thinking cities globally, Hong Kong has long been a hub for Asian and international ultra-high-net-worth (UHNW) families and their family offices (FOs). Now, with the HKSAR Government having launched a new eight-pronged incentive to attract more family offices to come set up here, the reasons to set up shop in the special administrative region are myriad.
Aik-Ping NG, Head of Family Office Advisory, Asia Pacific, for HSBC Global Private Banking discusses the government’s policy stance to help develop a vibrant family office ecosystem in Hong Kong.
On March 24, 2023, the HKSAR Government issued a policy statement with eight new initiatives to grow family offices in Hong Kong. What is covered?
As part of the Wealth For Good In Hong Kong Summit, a large-scale family office event held in Hong Kong in March, the government announced the new policy stance.
The eight new initiatives, which sets out the government’s policy stance and measures on developing a vibrant ecosystem for global family offices and asset owners are as follows (read the full policy statement here):
(1) Introducing a new Capital Investment Entrant Scheme (CIES)
(2) Offering tax concessions
(3) Providing market facilitation measures
(4) Establishing the Hong Kong Academy For Wealth Legacy
(5) Promoting art storage facilities at the Hong Kong International Airport
(6) Developing Hong Kong into a philanthropic centre
(7) Further expanding the role of the dedicated FamilyOfficeHK team in Invest Hong Kong (InvestHK)
(8) Launching a new network of family office service providers
The HKSAR Government is clearly embarking on a charm offensive to attract family offices. How is Hong Kong staying ahead of other ultra-high-net-worth-friendly places in Asia-Pacific in terms of meeting their relocation requirements?
There are multiple jurisdictional dimensions to consider when clients set up their family offices: In our communication with clients, several factors come into play, professional standards, disclosure, licensing, structuring, residency and taxation etc. Clients would take a holistic view when choosing where to set up their family office.
Hong Kong has a vibrant financial services ecosystem and proximity to mainland China. Permanent residency in Hong Kong has clear and transparent criteria of seven years continuous residency.
The recent family office tax concession regime gazetted recently on May 19, 2023, is another significant supportive measure. The new Hong Kong family office tax exemption scheme provides flexibility including the requirement of the family investment holding vehicle (FIHV) and FO's place of incorporation, qualification requirements for employees, definition of relevant family members, minimum of beneficiary interests held by family members versus charitable organisations etc. Meanwhile, there is no local investment required and clients can opt to elect for the scheme voluntarily with no prior approval needed.
By extension, how can HSBC Global Private Banking assist UHNW families in establishing new family offices in the region?
HSBC's family advisory team provides advisory support for clients to set up and professionalise their family offices. This includes assessment and design, implementation, ongoing governance and oversight. For family office tax exemption schemes in Hong Kong and Singapore, we will provide assistance with application / election in collaboration with client-appointed third-party service providers and coordinate with necessary teams within the bank to ensure alignment with the family's overall legacy plans.
As our clients adopt a longer-term strategic view towards wealth creation, protection and succession, HSBC Global Private Banking is able to and will continue to draw on our unique strengths as part of the wider HSBC group, leveraging our international connectivity and deep regional and local know-how to deliver a full suite of tailored wealth services and solutions for our clients.
Would you say that Hong Kong’s talent pool of private bankers, advisors, asset managers, lawyers, accountants, trustees etc, would be especially compelling to UHNW families?
Hong Kong is an international hub connecting global, Asian and mainland China markets. The conducive business environment, mature and stable capital market, excellent asset and wealth management system, and a large pool of experienced talent make Hong Kong a natural choice for international and Asian business owners and families looking to establish a family office here. Hong Kong’s reputation as a top international financial and wealth management centre is also built on a clear and transparent tax regime, including the latest family office tax exemption scheme.
In recent years, the HKSAR Government has implemented a number of schemes for importing labour and talent: the General Employment Policy, the Admission Scheme for Mainland Talents and Professionals, the Quality Migrant Admission Scheme, the Immigration Arrangements for Non-local Graduates, the Admission Scheme for the Second Generation of Chinese Hong Kong Permanent Residents, the Technology Talent Admission Scheme and the Top Talent Pass Scheme etc.
For the family office sector, the government has announced the establishment of a new Hong Kong Academy for Wealth Legacy to cultivate a deep talent pool and launch a network of family office service providers covering private banks, accounting and legal firms, trusts and other professional services firms. The Network of Family Office Service Providers, a platform specially designed to help promote Hong Kong as a preferred destination of choice for global family offices, was officially launched on June 12. HSBC Global Private Banking is poised to help clients plan and design their family offices and formulate family governance solutions. In addition, HSBC will continue to work closely with the government and key industry stakeholders to to further consolidate Hong Kong's position as a leading global family office hub.
