The Inland Revenue (Amendment) (Tax Concessions for Carried Interest) Bill 2021 (Bill) was recently published in the Hong Kong Government Gazette. The Bill contains legislative amendments to the Inland Revenue Ordinance, which allows for a 0% profits tax rate on carried interest distributed by eligible PE funds operating in Hong Kong. In addition, the Bill excludes 100% of eligible carried interest from employment income for the calculation of salaries tax. It represents yet another measure in the Hong Kong government’s efforts to develop Hong Kong into a premier PE hub. In a guest article, Simmons & Simmons partner Gaven Cheong examines the present Hong Kong tax regime that applies to PE funds and considers the key tax concession proposals in the Bill. The article then discusses open issues, questions or problems that remain if the tax concession is adopted, followed by key considerations for PE sponsors intending to take advantage of the favorable rate. Finally, it assesses the potential impact of the Bill on the PE industry in Hong Kong, including an alternative structure sponsors can pursue if qualifying requirements for the tax concession are too onerous. See “How Sponsors Can Benefit From Fund Launches Under Hong Kong’s Proposed Limited Partnership Regime” (Aug. 11, 2020); and “How Private Fund Managers Can Access Investor Capital in Hong Kong and China” (Feb. 23, 2017).