Hong Kong is considering waiving tax on fund managers’ performance bonuses in order to woo investment talent, say market participants and sources familiar with the plans.

The reforms would make Hong Kong the first major financial centre in Asia to introduce tax breaks for individuals on performance bonuses, called “carried interest”, and could draw top wealth managers and star investors to set up in the city.

“The industry has a lot of excitement over this,” said Eric Lam, an M&A tax services partner at Deloitte. “We are proactively talking to our clients on how to best prepare.”

Hong Kong now taxes performance bonuses tied to investment returns at up to 17%, affecting how hedge funds make profits and reward their best portfolio managers, especially in good years.