Hong Kong’s Legislative Council, from the Science and Technology Innovation Community, has proposed the inclusion of Bitcoin purchased on licensed exchanges as part of the city’s revamped investment immigration program, according to a local media report. The proposal comes as Hong Kong reactivates its investment immigration program after an eight-year hiatus, setting an entry threshold of approximately US$3.84 million.
Expanding investment horizons with digital assets
The legislative initiative, spearheaded by Qiu Dagen, a member of the Legislative Council from the Science and Technology Innovation Community, aims to broaden the scope of assets under the program. He argues that Bitcoin, traded on licensed virtual asset exchanges, should theoretically qualify as a financial product for investment purposes. This suggestion marks a significant shift from traditional asset classes, highlighting the evolving nature of investment in the digital age.
The revised program, however, explicitly excludes investments in real estate and does not extend eligibility to mainland Chinese citizens. Wang Zhiwei, a partner specializing in family enterprises and private wealth tax planning in mainland China and Hong Kong, emphasized the program’s appeal due to Hong Kong’s low tax rates and absence of inheritance tax. The program requires a seven-year residency for permanent residence eligibility, a rule that, according to Wang, is unlikely to change despite some applicants’ requests for a shorter timeframe.
Tax incentives and global competition in wealth attraction strategies
Besides Bitcoin, there are calls for expanding eligible investments to stimulate sectors like real estate. However, the government has clarified that only real estate-related financial products, such as real estate investment trusts (REITs), are included under the current framework.
Tax relief is another strategy proposed to attract more family offices to Hong Kong. Wang Xiaoyan, a Hong Kong tax partner, advocates for expanding the classes of assets and income eligible for tax incentives. The current preferential system covers traditional assets like stocks, derivative instruments, and bonds, but emerging and alternative investment products such as art, wine, and virtual assets are not included yet.
The policy also extends tax relief to profits generated from the sale of interest-bearing assets like bonds, but with a cap where the relevant interest income cannot exceed 5% of the total income. Given that family offices often have a significant proportion of their income derived from these assets, there’s a call for optimizing this system.
The Hong Kong government aims to establish 200 offices by 2025 to bolster this initiative. However, the effectiveness of these measures in competing with other global hubs like Singapore and Dubai is still a matter of debate. Zeng Peilin, chairman of Zeng Group, suggests that while the government’s policy direction is commendable, there is room for further enhancement to make the offerings more attractive.
Qiu Dagen also highlighted the need to target regions like the Middle East, noting that political factors and global trends play a crucial role in attracting wealthy individuals and their assets. According to him, the focus on the Middle East could capitalize on the region’s search for diversified investment destinations.
If implemented, this proposal could mark a significant milestone in integrating digital assets into mainstream investment strategies. It reflects Hong Kong’s willingness to adapt and innovate in an increasingly digital global economy.
