June 23, 2022
Hong Kong proposes shipping-related tax concession regime
On 15 June 2022, the Inland Revenue (Amendment) (Tax Concessions for Certain Shipping-related Activities) Bill 2022 was submitted to Hong Kong's Legislative Council. The bill introduces a dedicated tax concession regime offering tax incentives to qualifying shipping commercial principals (i.e., ship agents, ship managers and ship brokers) in Hong Kong.
This Alert summarizes the key provisions of the tax regime.
Subject to certain anti-avoidance provisions, the proposed tax concession regime provides that:
The proposed tax concessions will apply to sums received or accrued on or after 1 April 2022. Taxpayers must elect in writing if they plan to avail themselves of the above tax concessions. Such an election, once made, is irrevocable for so long as the taxpayer remains as a qualifying shipping commercial principal.
Eligibility to the proposed tax concession regime
The table below lists out the qualifying requirements for the proposed tax concession regime:
Specific anti-avoidance provisions
The Bill contains the following specific anti-avoidance provisions that would operate to:
For additional information with respect to this Alert, please contact the following:
Ernst & Young Tax Services Limited, Hong Kong
Ernst & Young LLP (United States), Hong Kong Tax Desk, New York
Ernst & Young LLP (United States), Asia Pacific Business Group, New York
Ernst & Young LLP (United States), Asia Pacific Business Group, Chicago
1 An associated shipping enterprise refers to a person who is a ship lessor, ship leasing manager, ship operator or ship owner entitled to tax concessions or exemption under section 14P(1), 14T(1) or 23B of the Inland Revenue Ordinance and (a) over which the qualifying shipping commercial principal has control, (b) which has control over the qualifying shipping commercial principal or (c) which is under the control of the same person as the qualifying shipping commercial principal.