Hong Kong reduces tax on spirits imports

Published Wednesday 16th October 2024

Hong Kong has made a major move by slashing its spirits tax, aiming to boost its economy and nightlife. The city, known for its bustling financial and social scene, has faced challenges due to a slowdown in China’s economy and a drop in tourist numbers. This tax cut is seen as a key step towards revitalising the city - great news for lovers of fine spirits.

Huge Tax Cut on Spirits

Previously, spirits with over 30% alcohol content, such as whisky, gin, and brandy, were subject to a 100% tax in Hong Kong. As of Wednesday 16th October 2024, this tax has been reduced to just 10% for the portion of the product’s value above HK$200 (about £21). The goal is to promote the liquor trade, attract tourists, and encourage more spending in high-end food and drink venues.

Impact on the Spirits Industry

While the spirits tax only made up about 0.1% of Hong Kong’s overall tax revenue, the potential benefits are significant. Economists, including Gary Ng from Natixis, believe the reduction could help Hong Kong strengthen its role as Asia’s main spirits trading hub. It’s also expected to reduce costs for retailers and restaurants, making spirits more affordable.

"The existing liquor duty accounts for only about 0.1 per cent of Hong Kong’s total tax revenue. [The duty cut] can probably bring more economic benefits than the loss . . . and help lift Hong Kong’s position as Asia’s spirits trading hub.” - Gary Ng, economist at Natixis

A Strategy That Mirrors Wine Duty Removal

This is not the first time Hong Kong has made bold tax changes to stimulate its alcohol market. In 2008, the government removed the wine duty, which led to a surge in wine imports and sales. Major drinks companies like Pernod Ricard and Campari Group had been pushing for similar tax reductions on spirits, and this new change is expected to have a similar positive effect.

Price of Whisky (HKD)	Old Tax Rate (100%)	New Tax Rate (10%)
Base Price	$500	$500
Tax Amount	$500	$50
Total Cost	$1,000	$550

What This Means for Spirits Lovers

At Hedonism Wines, we’re excited to see how this tax cut will influence the spirits market. Hong Kong’s reduction in spirits duty could open up new opportunities for whisky, gin, and brandy enthusiasts both locally and internationally. If you’re a spirits fan, this is definitely something to watch!