10 June 2016 Hong Kong's Inland Revenue Department publishes guidance on salaries tax treatment of performance fees and carried interest The Hong Kong Inland Revenue Department (IRD) has recently included some guidance on the salaries tax treatment of performance fees and carried interest distributed to executives or employees of a fund management company, in Departmental Interpretation and Practice Notes (DIPN) No. 51 — Profits Tax Exemption for Offshore Private Equity Funds, issued on May 31. In summary, the guidance defines that where the performance fees and carried interest allocated to executives or employees of a fund management company are not genuine investment returns, the IRD could invoke the general anti-avoidance provisions to treat the performance fees and carried interest distribution as employment income. A Tax Alert prepared by EY's People Advisory Services group, and attached below, provides additional details. Document ID: 2016-1013 |
