The Future of Hong Kong’s Tax Regime for Family Offices: Trends and Predictions

Introduction: Hong Kong’s Ambitious Family Office Vision

Hong Kong is strategically positioning itself as Asia’s premier family office hub, implementing a comprehensive tax regime that rivals and in some aspects surpasses competing jurisdictions. As we move through 2025 and beyond, the Special Administrative Region is not merely keeping pace with global trends but actively shaping the future of family office taxation and regulation in Asia.

The family office landscape is experiencing unprecedented growth globally, with ultra-high-net-worth families increasingly seeking professional structures to manage multi-generational wealth. Hong Kong’s response has been methodical and aggressive: a tax concession regime launched in May 2023, enhanced in November 2024, and continuously refined to meet evolving market demands. This article examines the trajectory of Hong Kong’s family office tax regime, analyzing current trends, recent regulatory developments, and predictions for the future.

The Current Framework: FIHV Tax Concession Regime

Statutory Foundations and Core Benefits

The Family-Owned Investment Holding Vehicle (FIHV) tax concession regime, introduced in 2022 and implemented for assessment years starting April 1, 2022, represents Hong Kong’s flagship initiative to attract single-family offices. Unlike discretionary exemption systems employed in some jurisdictions, Hong Kong’s regime operates on a statutory basis, providing predictability and legal certainty that sophisticated family offices demand.

The core benefits are substantial and multi-faceted:

• Zero Profits Tax: Eligible FIHVs enjoy complete exemption from profits tax on qualifying transactions
• No Capital Gains Tax: Hong Kong’s territorial tax system does not impose capital gains tax on asset appreciation
• No Inheritance or Estate Tax: Wealth transfer across generations occurs tax-free
• No Withholding Tax: Dividends and interest payments face no withholding obligations
• Automatic Application: Tax concessions apply automatically when minimum criteria are met, eliminating bureaucratic approval processes

This automatic application feature distinguishes Hong Kong from Singapore’s regime, where families must obtain prior approval from the Monetary Authority of Singapore—a process that can extend up to two years. The immediate certainty available in Hong Kong provides a significant competitive advantage for families seeking rapid deployment of capital.

Qualifying Assets and Transactions

Under the current framework, FIHVs receive tax exemptions on investment profits from qualified assets under Schedule 16C of the Inland Revenue Ordinance, which encompasses most typical financial assets held by family offices, including:

• Securities (stocks, bonds, debentures)
• Futures contracts and derivatives
• Foreign exchange contracts
• Deposits with authorized financial institutions
• Shares in private companies
• Certain OTC derivatives

Additionally, incidental income arising from holding qualified assets—such as interest from bonds—can be exempted from profits tax, subject to a 5% threshold under the current rules. This threshold, however, is targeted for removal under the November 2024 proposed enhancements.

November 2024 Enhancements: A Paradigm Shift

Consultation Paper and Stakeholder Engagement

On November 25, 2024, the Financial Services and Treasury Bureau (FSTB) issued a comprehensive consultation paper outlining significant enhancements to three key preferential tax regimes: the unified fund exemption regime, the FIHV tax concession regime, and the carried interest tax concession regime. The consultation period concluded on January 3, 2025, with legislative changes expected later in 2025 with retrospective application.

This consultation represents Hong Kong’s commitment to evidence-based policy development, engaging industry stakeholders—family offices, tax advisors, legal professionals, and asset managers—in shaping the regulatory future. The proposed changes reflect direct feedback from the market and demonstrate Hong Kong’s agility in responding to competitive pressures and emerging asset classes.

Expanded Qualifying Assets: Embracing Innovation

The November 2024 proposals significantly broaden the scope of qualifying assets and transactions, positioning Hong Kong at the forefront of innovative wealth management. Key expansions include:

1. Virtual Assets and Digital Assets

Recognizing the growing importance of cryptocurrency and blockchain-based assets in family portfolios, the FSTB proposes including virtual assets as qualifying transactions. This aligns Hong Kong with forward-thinking jurisdictions and acknowledges that next-generation wealth holders increasingly allocate to digital assets. Hong Kong explicitly positions itself as a “low-tax, high-substance investment platform that is openly welcoming of regulated digital assets,” distinguishing it from more conservative competitors.

2. Carbon Credits and Emission Derivatives

Supporting ESG-driven investment strategies, the proposals include emission derivatives and carbon credits—particularly those traded on the Core Climate platform established by Hong Kong Exchanges and Clearing Limited (HKEX). This enhancement recognizes the increasing integration of environmental considerations in family office investment mandates and Hong Kong’s ambition to become a regional green finance hub.

3. Insurance-Linked Securities

The inclusion of insurance-linked securities (ILS) defined under Hong Kong’s Insurance Ordinance expands opportunities for families seeking uncorrelated returns and portfolio diversification through catastrophe bonds and other insurance-related instruments.

4. Private Credit and Loan Investments

Perhaps most significantly for family offices pursuing alternative strategies, the proposals expand qualifying transactions to include loans and private credit investments. This addresses a substantial gap in the original regime, as private credit has become one of the fastest-growing segments in family office portfolios globally, offering attractive risk-adjusted returns in an environment of traditional fixed-income challenges.

Removal of the 5% Incidental Income Threshold

Under the current regime, incidental income (such as interest from bonds or dividends) exceeding 5% of an FIHV’s total income becomes fully taxable—a provision that creates compliance complexity and tax unpredictability. The proposed removal of this threshold represents a major simplification, particularly benefiting bond funds, credit funds, and other income-generating strategies. Once implemented, all incidental income from qualified assets will receive the same tax treatment as capital gains, streamlining administration and enhancing Hong Kong’s attractiveness for income-focused family offices.

Broadened Income Eligibility

The proposals extend income eligibility to include profits from all Schedule 16C assets, non-taxable offshore income, and certain taxable income such as interest from private credit investments. This comprehensive approach ensures that diverse investment strategies—from traditional public markets to alternative investments—receive consistent tax treatment under the FIHV regime.

Pillar Two Global Minimum Tax: Navigating International Standards

Implementation Timeline and Scope

On June 6, 2025, Hong Kong enacted the Inland Revenue (Amendment) (Minimum Tax for Multinational Enterprise Groups) Ordinance 2025, implementing the global minimum tax and the Hong Kong Minimum Top-up Tax (HKMTT) in accordance with the OECD’s BEPS 2.0 Pillar Two framework. The measures apply retrospectively for fiscal years beginning on or after January 1, 2025.

Pillar Two establishes a global minimum effective tax rate of 15% for multinational enterprise (MNE) groups with annual consolidated revenue of EUR 750 million or above in at least two of the four fiscal years immediately preceding the current fiscal year. The framework aims to prevent base erosion and profit shifting by ensuring large multinational groups pay a minimum level of tax regardless of where they operate.

Critical Exemption for Investment Entities

Crucially for family offices, investment entities and insurance investment entities are excluded from the scope of the HKMTT. This exemption preserves tax neutrality for investment-focused structures—a fundamental principle for family office operations. Without this carve-out, FIHVs could face unexpected tax liabilities under Pillar Two rules, undermining the entire tax concession regime.

The exclusion ensures that family offices structured as investment entities continue to benefit from Hong Kong’s preferential tax treatment while the broader corporate sector complies with international minimum tax standards. This balanced approach allows Hong Kong to meet its OECD commitments while maintaining competitiveness in the family office sector.

Revenue Impact and Economic Considerations

The Hong Kong government estimates that Pillar Two implementation will generate approximately HKD 15 billion in annual tax revenue. This additional revenue stream supports public finances without compromising the family office value proposition, demonstrating Hong Kong’s ability to balance fiscal responsibility with competitive positioning in the global wealth management industry.

Capital Investment Entrant Scheme: Integration and Synergy

Scheme Relaunch and Objectives

The New Capital Investment Entrant Scheme (New CIES) was relaunched in March 2024 after a period of dormancy, aiming to attract high-net-worth individuals and business elites to Hong Kong through capital investments. The scheme requires applicants to invest a minimum of HKD 30 million in permissible assets, comprising at least HKD 27 million in permissible financial assets and/or real estate (capped at HKD 10 million), plus HKD 3 million in a dedicated Capital Investment Entrant Scheme Investment Portfolio (CIES IP).

In 2024, the scheme received over 800 applications, with 733 applicants verified as meeting the net asset requirement and 240 fulfilling the permissible investment criteria. This robust initial response demonstrates substantial demand among ultra-high-net-worth individuals for Hong Kong residency coupled with investment opportunities.

FIHV Integration: A Game-Changing Enhancement

Effective March 1, 2025, a critical enhancement created powerful synergy between the New CIES and the FIHV regime: permissible investments held by an FIHV or family-owned special purpose entity (FSPE) managed by an eligible single-family office are now counted toward the applicant’s investment requirement. The eligibility threshold requires the single-family office to manage assets with a net value of at least HKD 240 million.

This integration delivers multiple strategic benefits:

• Simplified Compliance: Families can consolidate their investment structures rather than maintaining separate portfolios for CIES compliance
• Tax Efficiency: FIHV tax concessions apply to assets that simultaneously satisfy CIES requirements
• Operational Efficiency: Single-family offices gain dual benefits—residency pathways and tax optimization—through one structure
• Enhanced Attractiveness: The combined offering positions Hong Kong uniquely against competitors that separate immigration and tax regimes

The market response has been dramatic: following the March 2025 enhancements, monthly application numbers doubled from approximately 70 applications (March 2024 to February 2025 average) to around 150 applications (March to May 2025). This surge reflects growing confidence in Hong Kong’s integrated approach to family office services and immigration pathways.

Hong Kong vs. Singapore: The Asian Family Office Competition

Current Market Positioning

The competition between Hong Kong and Singapore as Asia’s premier family office hubs has intensified significantly. Current statistics show Hong Kong hosting approximately 2,700 single-family offices compared to Singapore’s 2,000+. However, as of 2023, more than 59% of family offices in Asia were located in Singapore, indicating Singapore’s earlier head start in this sector.

According to Julius Baer’s 2025 Family Barometer annual report, which tracked 2,500 family office experts globally, Hong Kong and Singapore are increasingly viewed as “complementary rather than competing choices.” Hong Kong offers “unparalleled access to the mainland and regional reach,” while “Singapore provides diversification across Asia.” This dual-hub dynamic reflects the sophistication of Asia’s expanding family office landscape.

Comparative Regulatory Advantages

Hong Kong Advantages:

• Automatic Tax Concessions: No prior regulatory approval required; concessions apply automatically when criteria are met
• No Local Incorporation Requirement: Greater structural flexibility compared to Singapore’s mandatory local incorporation
• Simplified Operational Requirements: Lower regulatory burden for maintaining substance
• Gateway to China: Unparalleled access to mainland Chinese markets and investment opportunities
• Lower Tax Rate: No profits tax on qualifying transactions vs. Singapore’s corporate tax rate
• Digital Asset Openness: Explicit welcome for regulated virtual assets in family office portfolios

Singapore Advantages:

• Political Stability Perception: Some families perceive greater political distance from mainland China
• Established Ecosystem: Longer track record in family office services with mature professional infrastructure
• Clear Regulatory Framework: Well-established guidelines and precedents for family office operations
• Strong Government Support: Dedicated Family Office Development Team jointly established by MAS and EDB
• Regional Diversity: Strong connections to Southeast Asia and the Indian subcontinent

The Emerging Dual-Hub Strategy

Increasingly, sophisticated families are adopting a dual-hub strategy rather than selecting a single jurisdiction. This approach leverages Hong Kong’s China access and tax efficiency alongside Singapore’s stability and regional diversification. Private banking research indicates this trend will accelerate, with both jurisdictions remaining top family office markets in Asia over the next five years.

The dual-hub model typically involves establishing primary operational headquarters in one jurisdiction while maintaining a satellite office or special-purpose vehicles in the other. This geographic diversification provides risk management, tax optimization, and broader investment access—particularly valuable for families with pan-Asian interests.

Emerging Competition from Dubai

While Hong Kong and Singapore dominate Asian family office discourse, Dubai has emerged as formidable global competition. Dubai’s financial hub now hosts family offices controlling more than USD 1 trillion in assets, driven by an influx of high-net-worth individuals over recent years. Dubai offers zero personal income tax, zero capital gains tax, and strategic positioning between Asian and European time zones. This Middle Eastern alternative adds complexity to family office location decisions, particularly for families with global rather than solely Asian focus.

Future Trends and Predictions

1. Continued Regulatory Enhancement and Responsiveness

Hong Kong’s pattern of rapid regulatory iteration will continue. The government has demonstrated willingness to enhance regimes based on market feedback—evidenced by the November 2024 consultation following less than two years of FIHV operation. Expect further refinements addressing:

• Emerging asset classes (tokenized real estate, NFTs with investment value, decentralized finance positions)
• Compliance simplification to reduce administrative burden
• Enhanced flexibility for multi-generational wealth structures
• Integration with broader wealth management initiatives

The retrospective application of tax enhancements—a consistent feature of Hong Kong’s approach—provides certainty that families establishing operations now will benefit from future improvements.

2. Digital Asset Infrastructure Development

Hong Kong’s explicit embrace of regulated digital assets positions it ahead of more conservative jurisdictions. Predictions for the next 3-5 years include:

• Expansion of licensed virtual asset trading platforms (VATPs) catering to family office clients
• Development of digital asset custody solutions meeting institutional standards
• Integration of blockchain-based assets into traditional family office portfolios
• Potential establishment of a regulatory sandbox for innovative digital asset products
• Enhanced guidance on tax treatment of DeFi yields, staking rewards, and token airdrops

As younger generations assume family office leadership roles, digital asset allocation will likely increase substantially. Hong Kong’s proactive positioning in this space provides long-term competitive advantage.

3. Greater China Integration and Opportunities

Hong Kong’s unique position as a gateway to mainland China will become increasingly valuable as Chinese regulatory frameworks mature. Future developments may include:

• Enhanced mechanisms for family offices to access mainland investment opportunities (Stock Connect expansions, Bond Connect enhancements)
• Greater clarity on cross-border tax treatment for families with both Hong Kong and mainland assets
• Potential cooperation agreements facilitating wealth transfer and succession planning across Hong Kong-mainland structures
• Development of specialized investment products targeting Greater Bay Area opportunities

Families focused on Chinese market exposure will find Hong Kong increasingly indispensable, particularly as geopolitical considerations make direct mainland establishment more complex for some international families.

4. ESG and Impact Investing Focus

The inclusion of carbon credits and emission derivatives in the November 2024 proposals signals Hong Kong’s recognition of ESG’s growing importance in family office mandates. Future trends include:

• Expansion of green finance infrastructure supporting family office ESG investments
• Development of impact measurement frameworks aligned with international standards
• Tax incentives for investments supporting Hong Kong’s carbon neutrality goals
• Enhanced reporting capabilities for ESG performance within FIHV structures
• Growth of Hong Kong as a hub for sustainable finance and green bonds

Next-generation wealth holders increasingly prioritize values-aligned investing. Hong Kong’s infrastructure development in this area will influence long-term family office retention and attraction.

5. Talent and Expertise Development

Hong Kong’s family office ecosystem requires continuous talent development to support growth projections. Expected developments include:

• Expansion of professional education programs focused on family office management
• Immigration pathway enhancements for specialized family office professionals
• Growth of service provider ecosystem (legal, tax, investment advisory) with family office expertise
• Development of industry associations and peer networking opportunities
• Attraction of global family office talent through competitive compensation and quality of life

The government’s target of facilitating at least 200 family offices to establish or expand operations from 2022 to 2025 is likely to be achieved, with ambitious targets for subsequent years driving continued ecosystem investment.

6. Enhanced Cross-Border Planning Capabilities

As global tax transparency initiatives advance (CRS, FATCA, automatic exchange of information), Hong Kong’s family office regime will increasingly emphasize substance and legitimate tax planning:

• Stronger substance requirements ensuring genuine economic presence in Hong Kong
• Enhanced documentation standards demonstrating commercial rationale for structures
• Greater scrutiny of passive investment vehicles versus actively managed family offices
• Development of best practices for international tax compliance within FIHV structures

These developments will separate sophisticated, compliant family offices from tax-driven structures lacking genuine substance—ultimately enhancing Hong Kong’s reputation and sustainability as a family office hub.

7. Technology and Innovation Integration

Family office operations will increasingly leverage technology for efficiency, transparency, and decision-making:

• Adoption of family office management platforms providing consolidated portfolio views
• Integration of artificial intelligence for investment research and risk management
• Blockchain-based solutions for record-keeping, reporting, and transparency
• Regulatory technology (RegTech) streamlining compliance obligations
• Enhanced cybersecurity infrastructure protecting sensitive family information

Hong Kong’s robust technology sector and digital infrastructure position it well to support these innovations, providing competitive advantage over jurisdictions with less developed technological ecosystems.

Strategic Considerations for Family Offices

Timing and Implementation

Families considering Hong Kong establishment should note that enhancements to the FIHV regime will apply retrospectively once enacted. This means family offices established under current rules will automatically benefit from expanded qualifying assets and removed thresholds without restructuring. This retrospective approach significantly reduces timing risk and supports immediate establishment decisions.

Substance Requirements

While Hong Kong’s regime is more flexible than some competitors, genuine substance remains essential. Family offices should ensure:

• Adequate and qualified Hong Kong-based personnel making investment decisions
• Physical office space appropriate to operations
• Regular board meetings and decision-making occurring in Hong Kong
• Proper documentation of investment rationale and governance processes
• Compliance with all regulatory reporting and filing obligations

As international tax scrutiny intensifies, substance requirements will likely tighten. Establishing robust operational practices from inception provides long-term sustainability and reduces restructuring needs.

Integration with Global Structures

Hong Kong family offices rarely operate in isolation. Effective integration with global wealth structures requires:

• Coordination with existing trusts, foundations, and holding companies in other jurisdictions
• Clear delineation of roles between Hong Kong entities and offshore structures
• Transfer pricing considerations for intra-group transactions
• Estate planning alignment ensuring Hong Kong structures support succession objectives
• Regular review of cross-border tax positions as international rules evolve

Professional advisors with multi-jurisdictional expertise become invaluable for families with complex global footprints.

Conclusion: Hong Kong’s Competitive Trajectory

Hong Kong’s family office tax regime has rapidly evolved from nascent initiative to competitive global offering. The FIHV regime’s statutory basis, automatic application, and comprehensive tax benefits provide foundational strength. The November 2024 enhancements demonstrate government commitment to maintaining competitiveness through responsive regulation addressing emerging asset classes and simplifying compliance.

Integration with the Capital Investment Entrant Scheme creates unique synergies unavailable in competing jurisdictions, combining immigration pathways with tax efficiency in a single structure. The exclusion of investment entities from Pillar Two minimum tax requirements preserves Hong Kong’s tax advantage while meeting international obligations.

Looking forward, Hong Kong’s trajectory appears strongly positive. Continued regulatory enhancement, digital asset leadership, Greater China integration, ESG infrastructure development, and talent ecosystem growth position Hong Kong to attract an increasing share of global family office formations. While Singapore remains formidable competition, and Dubai emerges as an alternative, Hong Kong’s unique combination of tax efficiency, market access, and regulatory sophistication creates sustainable competitive advantages.

The dual-hub strategy increasingly adopted by sophisticated families suggests the Hong Kong-Singapore question is evolving from “either/or” to “both/and.” This complementary dynamic may ultimately benefit Hong Kong by reducing zero-sum competition and highlighting jurisdictional strengths serving different family needs.

For family offices, the decision framework should prioritize long-term strategic fit over short-term tax optimization. Hong Kong offers compelling benefits for families with Asian investment focus, Greater China exposure, digital asset allocation, and preference for regulatory certainty through statutory regimes. As the landscape continues evolving, Hong Kong’s demonstrated adaptability and government commitment suggest it will remain at the forefront of global family office jurisdiction competition for years to come.