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Hong Kong economy
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Spirits industry calls on Hong Kong finance chief Paul Chan to slash taxes on strong alcohol – but medical professionals slam ‘backwards’ step

  • Asia Pacific International Wines and Spirits Alliance says tax reforms could bring economic benefits worth HK$1 billion to city
  • Hong Kong has 100 per cent tax on liquor with an alcoholic strength of more than 30 per cent by volume

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Hong Kong adopted zero duty on wine in 2008, but kept its 100 per cent tax on liquor with an alcoholic strength of more than 30 per cent by volume. Photo: AP
Kimmy Chung

Hong Kong should ditch its outdated, high taxation system for strong alcohol, a regional trade body told the finance chief, claiming its proposals on tax reform could bring in more than HK$1 billion in economic benefits and turn the city into a spirits auction hub of Asia.

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The Asia Pacific International Wines and Spirits Alliance, along with the European and British chambers of commerce in Hong Kong, wrote to Financial Secretary Paul Chan Mo-po ahead of his budget address, backing up their proposal with a study by an economics professor at a local university.

Hong Kong adopted zero duty on wine in 2008, but kept its 100 per cent tax on liquor with an alcoholic strength of more than 30 per cent by volume – one of the heftiest rates in the region when compared with 30 to 50 per cent in mainland China, Taiwan and Japan.

Hong Kong imported 20 million litres of whisky and other spirits in 2017. Photo: Felix Wong
Hong Kong imported 20 million litres of whisky and other spirits in 2017. Photo: Felix Wong

The alliance called on the government to scrap the current tax system, which is based on the import value of a product, and to set the rate at around HK$75 per litre of pure alcohol.

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For example, a 750ml bottle of liquor with 50 per cent alcohol content, no matter the value, would be taxed at HK$28 under the proposed system.

According to customs statistics, Hong Kong imported 20 million litres of whisky and other spirits in 2017, amounting to a total value of HK$4.4 billion.

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