Hong Kong's Financial Services and the Treasury Bureau said proprietary trading firms will not be brought into the city's proposed tax concession changes, rejecting reports that traders using a firm's own capital could receive tax-exempt performance pay. The bureau said such businesses do not qualify as a "fund" under the Inland Revenue Ordinance, so compensation paid by those firms cannot benefit from the proposed exemption in the Inland Revenue (Amendment) Bill 2026. The clarification followed a Financial Times report that Hong Kong was considering extending the reform to firms such as Jane Street and Citadel Securities. The bureau said the bill, submitted to the Legislative Council in June, is designed in part to expand the carried interest (performance-linked share of investment profits) tax concession regime, but only for entities that satisfy the legal definition of a fund. That definition requires that participants lack day-to-day control over the management of the relevant property, excluding ordinary commercial or industrial businesses. It also said employee tax relief at fund management companies depends on whether the remuneration qualifies as eligible carried interest tied to investment management services in Hong Kong and whether other statutory conditions are met. Officials added that the bill has completed clause-by-clause scrutiny by the Legislative Council's Bills Committee, with the government seeking to resume the second reading debate in the second half of this year. If passed smoothly, the measures could take effect as early as the 2025/26 tax year. The Inland Revenue Department is expected to issue administrative guidance where needed. The government said local and overseas fund managers have indicated plans to establish or expand operations in Hong Kong under the new regime, which authorities expect will attract more global capital and reinforce the city's role as an international asset and wealth management center.