The profits tax exemption
available to offshore venture capital funds included in the Innovation and Technology Venture Fund in Hong Kong will continue to apply, according to a draft law proposed by the Government. There has been some concern over the fact that venture funds involved in this project would lose their exempted status. In turn, this would have discouraged investors who would have wanted to open a Hong Kong company
in the innovation and technology field.
Profits tax exemption for offshore venture capital funds
The Government of Hong Kong has clarified the manner in which the profits tax exemption will continue to apply to offshore venture capital funds that are involved in the Innovation and Technology Venture Fund (ITVF). Within this scheme, the venture capital funds can co-invest with the Government and the concern in this situation was that, because of this co-investment, the fund could have lost its tax exemption status, making it liable for profits tax on investment profits irrespective of the jurisdiction in which they arise. This would have had the potential to discourage participation in the ITVF altogether.
The draft law was already scheduled for debate in Parliament in May and it was intended for its start date to be June 22nd, 2018. One of our Hong Kong company formation agents
can give you more details on the evolution of this tax break.
The Innovation and Technology Venture Fund in Hong Kong
The Innovation and Technology Venture Fund was set up with the purpose of encouraging private investment in start-ups in the innovation and technology sector
. The Government has set up a company, the Innovation and Technology Venture Fund Corporation to act as a special purpose vehicle that will co-invest with selected venture capital funds. The approximate investment ration would be 1 to 2.
Certain eligibility criteria apply for co-investment partners, such as a minimum fund life and a minimum committed capital for the investment. One of our agents who specialize in company formation in Hong Kong can give you more details.
for complete assistance for investments in Hong Kong.