As UK fund managers are well aware, the UK taxation of carry has been somewhat volatile in recent years. The disguised investment management fee rules, combined with the new carry regime (not forgetting the income-based carry rules) have created an incredibly complex system to navigate, and one which has led to a significant increase in tax paid by fund managers.

The UK has not been alone in reforming its carry tax regime and US taxpayers and those across Europe face similar complexities and increased tax rates. 

It is therefore an interesting (and notable) move by the Hong Kong tax authority to suggest that it is looking at relaxing the taxation of carry to make Hong Kong more competitive in attracting fund management activity. This feels like a development worth watching.