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Abstract: 

Tax considerations play a major role in the decisions of fund managers of where to base their funds. The highly mobile nature of capital has resulted in tax competition, leading to several host jurisdictions for funds in Asia (Hong Kong, Singapore, Labuan, and the BVI) having very similar tax characteristics in terms of low effective corporate income tax rates; no capital gains taxes; no exit taxes; a single tier of taxation; and generally no withholding taxes. Other ways in which jurisdictions have attempted to distinguish themselves include a strong Double Tax Agreement network, certainty on the taxation of any carried interest, and offering a segregated portfolio company structure. Offering a segregated portfolio company structure is particularly important to promote local domiciliation of funds. Hong Kong is now the only one of the four jurisdictions in this study that does not offer such a structure.

Keywords: double tax agreements, corporate income tax, capital gains taxes, exit taxes, distributions of income, segregated portfolio companies

Affiliations:  1: Singapore Management University.