Singapore touts AI edge as Hong Kong woos funds with zero tax on carry

The competition between Asia's two premier financial hubs has entered a new phase, with Singapore leaning on its access to advanced artificial intelligence tools to retain investment managers even as Hong Kong rolls out sweeping tax incentives for fund professionals.

Hong Kong's Zero-Tax Play

Hong Kong's Inland Revenue (Amendment) Bill 2026, gazetted in June, proposes cutting profits tax and salaries tax on qualified carried interest and performance fees to zero for eligible funds, family offices, and their employees. The legislation expands the scope of the preferential regime beyond private equity to cover hedge funds, credit funds, and venture capital.alvarezandmarsal+1

On August 12, the Financial Services and the Treasury Bureau clarified the boundaries of the new regime, stating that "remuneration distributed by proprietary trading businesses does not qualify for tax concessions proposed under the Inland Revenue (Amendment) Bill 2026". That exclusion means firms such as Jane Street, Citadel Securities, and Jump Trading would not benefit from the incentives.ird+3

The bureau explained that under the Inland Revenue Ordinance, a fund must satisfy the requirement that participating persons do not have day-to-day control over property management — a condition proprietary trading operations cannot meet.info+1

Singapore's AI Advantage

In July, the Alternative Investment Management Association raised concerns that the tax changes were prompting top hedge fund and private equity executives to consider relocating from Singapore to Hong Kong. Bloomberg reported the same month that Singapore was mulling its own tax cuts and easier talent entry rules for hedge funds in response.cryptopolitan+1

But Singapore's financial industry is also banking on a structural edge: unrestricted access to Western AI models from OpenAI Microsoft Corporation ↘ 0.30% and Anthropic, which remain unavailable in Hong Kong due to US tech firms' own restrictions on the region. For quantitative funds that rely on sophisticated algorithms, this access is becoming a deciding factor. LEK Consulting's Justin Tan told the Financial Times Pearson plc ↘ 0.62% that the technology gap is already prompting Hong Kong-based quant funds to consider moving research and trading operations to Singapore.cryptopolitan

The point was underscored in May when Citadel told members of its Hong Kong-based global quantitative strategies team to relocate to Singapore or Miami, or leave the firm, according to Reuters. Though Citadel said the moves were part of a "global co-location strategy," people familiar with the matter cited concerns about data security and access to AI tools as factors.reuters+1

A Dual-Track Competition

Kerry Goh, CEO of Kamet Capital, told the Financial Times that establishing operations in Singapore gives global clients confidence their intellectual property will remain independent of both Chinese and US restrictions. Benjamin Hung, chair of Hong Kong's Financial Services Development Council, countered that the city's structural advantages — rule of law, deep capital markets, and free movement of capital — remain intact, calling tax "a tactical play to bring people in".cryptopolitan

The rivalry now runs on parallel tracks: Hong Kong offering fiscal incentives to attract fund managers earning seven- and eight-figure performance bonuses, and Singapore positioning itself as a technology-neutral hub where firms can deploy the latest AI from both sides of the US-China divide.