In his recent policy address, Hong Kong’s Chief Executive John Lee announced a reduction in the city’s high liquor tax. Earlier this year, stakeholders had urged the government to lift or adjust the spirits tax prior to his address.
Before the tax reduction, liquor with an alcoholic strength of over 30% by volume, including whisky, brandy, and gin, was subjected to a 100% tax, making it one of the highest alcohol duties in the world. In comparison, neighboring Macau and China impose a tax of only 10%.
Starting Wednesday, the duty on liquor with an import price exceeding HKD200 will be reduced from 100% to 10% for the portion above HKD200. However, the rate for liquor priced at HK$200 or below will remain unchanged. This newly enacted decision aims to replicate the success of Hong Kong’s 2008 abolition of wine taxes, which significantly boosted wine auctions and trading while fostering new wine businesses in the industry.
The move is intended to revive the city’s struggling nightlife scene and enhance tourism, particularly in the high-end dining sector. Despite being renowned for having some of the best bars in Asia, bar and restaurant owners are facing ongoing challenges due to shop closures and declining customer patronage. These difficulties are attributed to changes in post-pandemic lifestyles, shifts in local consumption patterns, and an increase in the number of residents leaving Hong Kong for other countries. The new rule seeks to strengthen the city’s competitiveness, particularly in light of the tough competition posed by economic rivals such as Singapore and Japan.
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