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Saturday 18 October 2008
Shanghai Eyes Tax Breaks for Funds
Shanghai is considering tax and other incentives to lure venture capital, private equity and hedge funds to the nation’s financial hub, according to a senior city official.
Shanghai is considering tax and other incentives to lure venture capital, private equity and hedge funds to the nation’s financial hub, according to a senior city official.
Shanghai was looking at scrapping a 20 per cent capital gains tax on hedge funds operating in the city and easing the tax burden on managers of venture capital and private equity funds, Fang Xinghai, director-general of the Shanghai Municipal Government’s Financial Services Office, said yesterday.
“It’s wrong to slow the pace of developing private equity, venture capital and hedge funds due to the global financial crisis,” said Mr Fang said. “They can play an important role in China’s industrial restructuring.”
Most foreign investment funds, including Carlyle Group and Bain Capital, invest in mainland firms through overseas units because of stringent capital controls and regulatory ambiguity.
There are no nationwide rules that clearly establish the legal status of such funds.
In August, Shanghai said it would allow foreign investors, including private equity and venture capital funds, to register legally as local equities investment firms, as part of its efforts to compete with other cities such as Beijing and Tianjin.
Mr Fang said that Shanghai might also allow locally registered venture capital and private equity firms, which normally do not trade on the secondary securities markets, to open stock accounts, as valuations of certain listed companies become increasingly attractive to them.
Frank Tang, chief executive of private equity firm Fountainvest Partners, said his company would be interested in trading on the city’s stock market.
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Shanghai Eyes Tax Breaks for Funds
Reuters in Shanghai
18 October 2008
Shanghai is considering tax and other incentives to lure venture capital, private equity and hedge funds to the nation’s financial hub, according to a senior city official.
Shanghai was looking at scrapping a 20 per cent capital gains tax on hedge funds operating in the city and easing the tax burden on managers of venture capital and private equity funds, Fang Xinghai, director-general of the Shanghai Municipal Government’s Financial Services Office, said yesterday.
“It’s wrong to slow the pace of developing private equity, venture capital and hedge funds due to the global financial crisis,” said Mr Fang said. “They can play an important role in China’s industrial restructuring.”
Most foreign investment funds, including Carlyle Group and Bain Capital, invest in mainland firms through overseas units because of stringent capital controls and regulatory ambiguity.
There are no nationwide rules that clearly establish the legal status of such funds.
In August, Shanghai said it would allow foreign investors, including private equity and venture capital funds, to register legally as local equities investment firms, as part of its efforts to compete with other cities such as Beijing and Tianjin.
Mr Fang said that Shanghai might also allow locally registered venture capital and private equity firms, which normally do not trade on the secondary securities markets, to open stock accounts, as valuations of certain listed companies become increasingly attractive to them.
Frank Tang, chief executive of private equity firm Fountainvest Partners, said his company would be interested in trading on the city’s stock market.
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