Advertisement
Advertisement
The new policy might stimulate demand for branded perfumes and bags in Hong Kong again, said one expert. Photo: SCMP Pictures

Good news for Hong Kong’s battered luxury sector – Beijing tax reforms may bring the shoppers back

Duties on expensive items bought on cross-border online platforms could almost double under reforms aiming to stem the massive capital outflow

Hong Kong’s battered luxury sector is in for a boost as expensive items bought online will cost more under Beijing’s recent tax reforms.

In the latest adjustment, which took effect yesterday, imported goods brought from cross-border e-commerce platforms, will not be subject to the one-stop “postal tax”, but a new system, comprising three different taxes – tariff, value-added tax and consumption tax.

Despite some cuts on taxes on daily staples, the new policy put a 2,000 yuan (HK$2,400) cap on the amount consumers are allowed to buy in a single purchase without incurring a tariff.

This is expected to prompt mainlanders to buy luxuries at home and when they travel overseas – which could benefit the SAR.

Duties on expensive items such as luxury bags could almost double. Photo: Felix Wong

“The new policy might stimulate demand for branded perfumes and bags in Hong Kong again,” said Chen Bo, professor at Shanghai University of Finance and Economics.

Chen explained that under the previous tax system, China customs charged a rate of around 20 to 30 per cent for luxury items, but the costs could now almost double.

Cross-border e-commerce is one of the latest experiments by President Xi Jinping to boost domestic consumption amid massive capital outflows.

It was seen as a threat to Hong Kong’s retail market, as mainland consumers could easily purchase high-quality goods directly from overseas retailers at discounted prices, compared with those sold at physical stores on the mainland.

Catherine Tsang, tax partner at accountant firm PricewaterhouseCoopers echoed Chen’s prediction.

She said the tax-free luxuries in the city’s shopping malls would suddenly become attractive to mainlanders again.

“The tax adjustment is a good thing for Hong Kong” Tsang said.

Tax rates on milk powder will only change slightly under the new system. Photo: Felix Wong

But she didn’t think the same policy would bring more parallel traders to Hong Kong, because the tax rates for daily consumables, such as milk powder and personal care products, were only slightly changed in the new tax system.

The year-long economic downturn took a heavy toll on the city’s luxury sector.

Sales of jewellery, watches and clocks, and valuable gifts decreased by 24.2 per cent in the first two months this year compared with the same period a year ago.

Post