Cities across China regularly compete for investors, but lawyers and advisers say the package of incentives available in Shannan, known as Lhoka in Tibetan, is unusually aggressive and is beginning to attract interest.
The enticements for private equity funds to set up shop in Tibet are part of the Chinese government's push to develop the region's economy at the same time as establishing firmer control over it.
Some scholars have called for a more flexible approach to the country's restive Tibetan minority, but top leaders have vowed to take a hard line against anyone seen as agitating for independence.
Of the 300,000 people in Shannan, more than 90 per cent are of Tibetan ethnicity. The investment companies that have been lured there are almost entirely managed by Han Chinese, consistent with the government's strategy of encouraging Han to populate areas inhabited by minority groups.
Tibet has set the corporate tax rate for investors at just 15 per cent, well below the national norm of 25 per cent. Companies that pay more than Rmb5m ($820,000) in tax can have as much as 40 per cent returned to them.
The Tibetan government has also introduced a flat tax of 20 per cent on the incomes of some partners in private equity firms, a steep discount on the national rate where the highest bracket pays 45 per cent tax. And, unlike many other regions of China, it does not require that funds registering in Tibet invest in local companies; simply having Tibet as a domicile is enough.
"Many places throughout China, especially big cities like Beijing and Shanghai, have been offering preferential policies to private equity firms. But over the past year, lots more investors have been mentioning Tibet and talking about moving there," said Wang Jinghe, a lawyer with Dacheng law offices in Shanghai.
Mr. Wang said foreign private equity firms with renminbi funds in China would in theory be allowed to base themselves in Tibet but he had not heard of any doing so. Foreign visitors need special permits to enter Tibet and these can be difficult to obtain.
Zero2IPO, a research and advisory firm, had no record of Chinese private equity funds establishing themselves in Tibet until last year when three registered there. Figures are not yet available for this year, but anecdotal evidence points to a growing flow towards Tibet.
At the start of the year Dingxin Growth Fund established what analysts say is the biggest private equity fund to date in Tibet, a Rmb400m vehicle, though its mandate is to invest in property in other regions of China.
"Every lawyer we spoke to suggested that we consider basing ourselves in Tibet," the manager of a newly established fund told the Financial Times.
Tibet is also emerging as a haven for investors who want to limit their taxes when selling off shares. Conant Optical, an eyewear maker listed on China's venture capital stock exchange, announced on August 8 that its founder's investment company had moved from Shanghai to Shannan in Tibet and reduced its overall stake.
Golden Securities, an investment magazine, said in an article on Friday that it was "an open secret" that Tibet was the place to go to register shareholdings before selling them. The magazine said: "It's not hard to see that Shannan has become a hotspot for listed companies that are cutting their holdings."
The government of Shannan reported that its tax revenues in the first half of 2013 reached Rmb726mn, a 110 per cent increase over the same period a year earlier.
