Duty Reduction on High-Strength Liquor
In the recent Chief Executive’s Policy Address, the government disclosed a strategic initiative to reduce the duty levied on liquors boasting an alcohol content surpassing 30%. This reduction will be actualized through the introduction of a two-tier system, featuring distinct duty rates, set to become effective from October 16, 2024.
Under this novel system, liquors priced above the $200 threshold will witness a substantial decrease in duty charges, plummeting from the existing 100% to a mere 10% for the portion exceeding the $200 mark. Conversely, liquors priced at $200 or below will continue to bear the brunt of the current 100% duty rate. It is worth noting that these revised duty rates are exclusive to liquor volumes up to one litre. For containers exceeding this capacity, duty computations will be anchored on a ‘value per litre’ criterion.
A spokesperson representing the administration underscored that Hong Kong has adhered to a straightforward ad valorem duty structure for liquors since 1994. Drawing inspiration from the favourable outcomes of the 2008 wine duty waiver, the proposed reduction in liquor duties is geared towards invigorating high-end liquor trading. This strategic move is anticipated to ignite growth across various sectors including logistics, tourism, premium food and beverage consumption, thereby fostering the creation of employment opportunities and yielding significant societal benefits. The introduction of a two-tier duty system, incorporating value-based duty rates, is poised to strike a delicate equilibrium between facilitating liquor commerce and safeguarding public health by mitigating the risks of excessive alcohol consumption resulting from diminished liquor duties.
This intricate two-tier system is meticulously outlined in the forthcoming resolution, scheduled for presentation by the Secretary for Commerce and Economic Development as stipulated under section 4(2) of the Dutiable Commodities Ordinance (Cap. 109). The resolution forms an integral component of the Public Revenue Protection (Duty on Liquor) Order 2024, duly sanctioned by the Chief Executive, thereby conferring legal validity to the proposal throughout the tenure of the Order’s enforcement.
