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Beijing courts UK firms with tax benefits

Around 20 UK-based fund managers attended an online conference organised by the city of London and the Beijing Local Financial Supervision.

Beijing’s financial regulator is waiving certain taxes on overseas fund managers in a move to attract foreign players to establish in the capital, according to a statement from the Beijing Local Financial Supervision.

For example, fund managers that use funds to buy and sell stocks are not subject to corporate income tax. In terms of value-added tax, interest income from investments in treasury bonds, local government bonds and interbank transactions will also be exempted.

The tax exemptions are written in the Beijing Guidebook for Overseas Asset Management Institutions, which was launched last week during an online conference jointly held by the Beijing Local Financial Supervision and the Administration and the government of city of London.

The guidebook is compiled by the Asset Management Association of China, Beijing Asset Management Association, the Bejing Private Equity Association and the CFA Institute.

However, the statement did not say when these tax benefits will be enforced.

Attracting UK firms

“The release of the guideline will bring more opportunities to British and overseas asset managers,” William Russell, mayor of the city of London, said during the conference.

At least 20 UK-based asset managers attended the online meeting, which included representatives from Aberdeen Standard Investors, Schroders and Eastspring Investments, the statement noted.

“The UK is the second-largest asset management centre in the world, with an asset management scale of £9trn ($11trn). The City of London is committed to finding sustainable and responsible partners and Beijing is the first choice,” Russell added.

The conference follows after the city of London, the UK government, the London Stock Exchange, the British Investment Association and other British financial institutions jointly established the UK-China Partnership in Investment Management Initiative, according to the statement.

“The initiative aims to establish a continuous communication mechanism with Chinese policymakers and institutional investors to make people better understand London’s advantages in risk management, ESG investment, RMB product investment, diversified asset allocation,” the statement said.

Beijing has made efforts to attract foreign firms to establish in the capital. For example, it launched the qualified domestic limited partnership (QDLP) scheme earlier this year, in a move to compete against Shanghai, which remains to be the city of choice when establishing an onshore presence among foreign players.

The programme enables foreign asset managers to raise money in the mainland, with assigned quotas, to invest in offshore traditional and alternative investments, including overseas equity and bond funds, hedge funds and property.

Only a few foreign firms have established a business in Beijing, which include Oaktree Capital, which established a wholly foreign-owned enterprise in the City. The firm also has a WFOE in Shanghai, which holds a QDLP licence.


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