Hong Kong can entice family offices with low taxes and stable currency, investors say

Name: How can Hong Kong save itself from its nearly HK$100 billion deficit?
Uploaded: 2025-01-14T10:00:41.000Z
Duration: 12 min 40 s
Description: How can Hong Kong save itself from its nearly HK$100 billion deficit?

To avoid reducing its appeal for wealthy families, Hong Kong will need to look at ways other than higher taxes to trim budget shortfalls, Bonds Group says

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From left: Andrew Lo, head of family advisory for North Asia at UBS Global Wealth Management, Anson Chan, chairman and CEO of Bonds Group, Bryant Lu, vice-chairman of Ronald Lu & Partners and Janet Shih, chairwoman of Centaline Group Subsidiaries, speak at the Asian Financial Forum on January 14, 2025. Photo: Enoch Yiu

Enoch Yiu

Published: 6:00pm, 14 Jan 2025Updated: 8:20pm, 14 Jan 2025

Hong Kong should maintain its low tax regime, preserve its currency peg to the US dollar and embrace the trading of digital assets to attract more capital from global family offices, some investors said.

“Hong Kong is an attractive location for family offices because of its low tax jurisdiction,” said Anson Chan, chairman and CEO of his family-owned real estate company Bonds Group of Companies. “The city has low profit tax rates, while it has no inheritance tax.”

To keep that advantage, Chan said Hong Kong’s government will have to look options other than higher taxes to fill its coffers and reduce its budget deficit, he said at the Asian Financial Forum on Tuesday. This will depend on Financial Secretary Paul Chan Mo-po’s initiatives to balance the budget or avoid dipping too much into its reserves.

Hong Kong’s budget shortfall in the year to March 31 is expected to reach HK$100 billion (US$12.8 billion) versus an initial forecast in February of HK$48.1 billion, after the government stepped spending to spur growth. The economy grew at an annual pace of 1.8 per cent in the third quarter last year, slowing from 3.2 per cent in the preceding three months.

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How can Hong Kong save itself from its nearly HK$100 billion deficit?

The government announced tax breaks in May 2023, including a cash-for-residency programme, to entice wealthy business owners. Family offices seek investment gains, plan succession and pursue philanthropy. Hong Kong had more than 2,700 single-family offices last year, according to a report published by Deloitte.