Hong Kong lowers the alcohol tax

The import duty on spirits has been cut from 100% to 10% in an attempt to boost the economy of China’s special administrative region

Oct 17, 2024 - 23:17 Updated: Oct 18, 2024 - 00:07

Halloween celebrations at a bar in Hong Kong, China, in October 2022. © Alex Chan Tsz Yuk/SOPA Images/LightRocket via Getty Images

To help the economy, the import duty on spirits has been reduced from 100% to 10%.

In an effort to stimulate the economy, Hong Kong reduced its import duty on premium liquor from 100% to 10%. The move was declared on Wednesday by John Lee, the chief executive of the Chinese area, during a policy speech.

The action follows the EU's announcement of taxes on Chinese electric vehicles, which prompted the Chinese government to apply anti-dumping levies of up to 39% on brandy imports from the EU earlier this month. With some autonomy, Hong Kong is a special administrative area of China.

The region’s new low duties apply to drinks of the most expensive brands with more than 30% alcohol content and priced over $26 for a portion.

Lee said the slashing of duties aims to promote the liquor trade, drive tourism, and aid the development of industries such as logistics and storage, as part of a broader effort to “boost the economy and improve people’s livelihood.”

Hong Kong took a similar step in 2007, when the region’s government halved the 80% duty on wine before ditching it entirely a year later. The move resulted in Hong Kong becoming what has been described as “the heart of Asia’s wine trade” and one of the largest wine auction centers in the world.

Hong Kong’s economy grew by 3.3% in the second quarter of 2024 from a year earlier, the government said earlier this month. The region’s real GDP is forecast to increase between 2.5% and 3.5% this year, after posting 3.2% growth in 2023.

The region had one of the highest spirits taxes in the world, at 100%. Laos, a country in Southeast Asia, is among the handful that has an even greater tax on spirits—110%—according to research from Oxford Economics, as reported by The Telegraph on Wednesday.

The rate in China's mainland ranges from 15% to 25%. Spirit import taxes in Russia are twenty percent.