Breaking: Hong Kong Cuts Spirits Tax to 10% - Vino Joy News

Hong Kong has announced a major reduction in its spirits tax, slashing it from 100% to 10% on spirits priced above HKD 200 (US$25) per bottle, in a bid to replicate the success of its earlier wine tariff removal.

Chief Executive John Lee unveiled the new policy on October 16 during his 2024 Policy Address. Effective immediately, spirits with an import value exceeding HKD 200 will have the tax rate reduced to 10% on the portion above HKD 200. Spirits priced at or below HKD 200 will remain subject to the existing 100% tax rate.

Previously Hong Kong imposes a 100% tax on spirits with an alcohol content exceeding 30%. Lee stated the tax cut aims to stimulate the spirits trade and boost related sectors, including logistics, warehousing, tourism, and the high-end dining industry.

The government is hoping the tax cut will replicate the success of wine. The removal of wine taxes in 2008 helped propel wine trade in the city. After abolishing the wine duty, wine import value increased by 80% and 45% over two years, and wine sales volume grew by 54% within five years of the tax abolition.

The news in general was welcomed by the wine and spirits industry in Hong Kong. The relief is exepcted to boost particularly the city’s premium spirits imports. “For some of our Bourbon would be good news – as they have a big market in US and our prices are always much higher in Hong Kong…so will balance out the international prices,” says Betsy Haynes, Managing Director of Northeast Wines & Spirits Ltd.

However, for bars relying on cocktails and more affordable spirits, the tax will still remain high. “It’s good to encourage quality rather than qunatity,” Haynes added.

Earlier this year, The Macallan has opened a 6000 square feet, three-storey retail and experience shop in the heart of Central.

UK’s leading wine merchant Berry Bros and Rudd is also eyeing to expand its spiritis portfolio in anticipation of the policy change in Hong Kong, the company earlier told Vino Joy News.

In 2022, Hong Kong ranks as the world’s 10th largest spirits importer, with global imports recovering 7% year-on-year and valued at US$502 million. In 2023, the city imported US$395 million worth of brandy and whisky.