Hong Kong should press ahead with its proposed tax break on carried interest, the performance fees earned by hedge fund and private equity managers, after Singapore unveiled a rival tax-exemption scheme, according to industry participants.

The bill, submitted to lawmakers in June and expected to come to a vote later this year, has sparked debate in the financial industry. Some participants argue that the exemption is too narrow in scope, while others question the fairness of exempting ultra-wealthy fund managers from tax.

Bankers and other financial professionals have voiced concern that traders could relocate to rival jurisdictions offering similar tax incentives if the bill were delayed, and in this context, Singapore’s move was widely seen as a challenge.

“Hong Kong needs to proceed quickly with the proposed law change to continue strengthening our established reputable position as the No 1 global wealth management centre,” said Jasmine Lee Shun-yi, vice-president of Hong Kong Institute of Certified Public Accountants, adding that Singapore had taken action to “try to match our bill”.

“The tax break will be vital for Hong Kong to further increase its competitiveness to attract global fund managers to establish the entirety of their businesses in Hong Kong. In conjunction, it will also attract relevant diverse talent to consider moving to Hong Kong as well.”

Lee is optimistic about the potential benefits of the new bill.