Hong Kong considers widening tax reforms to proprietary trading firms
Tue, August 11, 2026 at 1:32 PM GMT+3 3 min read
Hong Kong is considering extending planned tax reforms for the investment industry to proprietary trading firms such as Jane Street and Citadel Securities, the Financial Times has reported.
The move is part of the city's broader effort to strengthen its standing as a global financial centre after several years of subdued activity.
It also comes as Hong Kong competes with Singapore, New York and Miami for high-end financial talent.
According to two people familiar with the process, cited by the FT, officials are weighing changes to proposed legislation so that employees at proprietary trading firms would not be taxed on performance-related pay.
Another option would be to issue guidance clarifying that traders qualify for the tax break, rather than make late amendments to the bill now before the legislative council.
The people added that any relief may not extend to all proprietary trading firms.
The bill was introduced in June with the aim of "attracting more funds and family offices to establish a presence in Hong Kong".
The proposed changes have already drawn attention in Singapore, where policymakers are considering their own tax reductions amid concerns that some portfolio managers could shift to Hong Kong.
Proprietary trading firms differ from traditional asset managers because they trade using their own capital, or money from employees, rather than investing on behalf of pension funds, governments or wealthy individuals.
More broadly, Hong Kong is proposing to allow gains from a wider range of investments to be treated as carried interest for tax purposes, instead of limiting that treatment to private equity transactions.
If approved, the changes would apply across hedge funds, private equity, venture capital, private credit and family offices, giving firms more scope to structure themselves in ways that reduce their Hong Kong tax liabilities.
One person familiar with the proposals had previously described them to the FT as a "big bang of tax reforms".
The plans are being discussed as Hong Kong recovers from a lengthy slowdown in dealmaking linked to the democracy protests and the Covid-19 pandemic.
Its IPO market has recently regained momentum, helped by a rise in listings by Chinese companies including CATL and Zhongji Innolight, as well as the return of many expatriates.
In June, Reuters reported that Hong Kong is considering scrapping tax on performance-linked bonuses for fund managers as it seeks to attract investment talent.
According to a Boston Consulting Group (BCG) report in May, Hong Kong became the world's largest cross-border wealth hub in 2025, surpassing Switzerland for the first time.
In its Global Wealth Report 2026: The Great Reordering, BCG said cross-border wealth booked in Hong Kong rose 10.7% last year to $2.9 trillion. The increase was driven by inflows from mainland China, strong IPO activity and gains in equity markets.
The report said global financial wealth also grew 10.7% in 2025, reaching $333 trillion, despite trade tensions, tariff disputes and geopolitical instability.
"Hong Kong considers widening tax reforms to proprietary trading firms" was originally created and published by Private Banker International, a GlobalData owned brand.
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