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July 26, 2022
2022-1127

Hong Kong enacts new legislation providing tax incentives for shipping commercial principals

Hong Kong enacted the Inland Revenue (Amendment) (Tax Concessions for Certain Shipping-related Activities) Ordinance 2022 (the New Law) on 22 July 2022.1 It takes retrospective effect and applies to sums received by, or accrued to, qualifying shipping commercial principals on or after 1 April 2022.

Subject to certain anti-avoidance provisions, the New Law provides 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:

  • Qualifying profits of a qualifying shipping commercial principal derived from carrying out a qualifying activity in Hong Kong will be taxed at a concessionary tax rate at 8.25%.
  • Qualifying profits derived by a qualifying shipping commercial principal from carrying out a qualifying activity for an associated shipping enterprise,2 which is entitled to a concessionary tax rate or income exemption, will also be eligible for the same tax concession as the associated shipping enterprise.

See EY Global Tax Alert, Hong Kong proposes shipping-related tax concession regime, dated 22 June 2022 for additional details on the tax concession regime.

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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

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ENDNOTES

1 The New Law was gazetted and formally became law on this date.

2 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.

 

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