Hong Kong Spirits Trading Up 60% Thanks To Tax Reform

Trading volumes have boomed since the government slashed duties on spirits in October, the region's commerce minister has said. Hong Kong's spirits sector has another excuse to celebrate this month after the city's commerce minister announced that trading volumes have risen by 60% in the first few months of this year after the government slashed spirits duties in October. Secretary for Commerce and Economic Development Algernon Yau Ying-wah revealed last week that the trade value of spirits in Hong Kong had increased by 1.5 times as of January. Volumes were up 60% over the same period. “The results have been encouraging since we cut the liquor tax. That is a good start,” he said, Yau said on a radio show. “We hope to become a trading hub for spirits and boost the business of the catering, hospitality, logistics and warehousing industries along the chain." Hong Kong Chief Executive John Lee Ka-chiu announced on 16 October that spirits tax will be slashed to 10% for the portion of the bottle price over HK$200. Lee's new policy favours premium liquors, as the tax rate on the portion of the bottle up to HK$200 remains at 100%, meaning the tax relief is bigger the more expensive the bottle. Until now Kong Kong has had one of the highest spirits duties of any territory in the world, as drinks with an ABV of 30% or higher are currently taxed at 100%. Analysis by Oxford Economics released in October suggested that international spirits contributed HK$1.4 billion to Hong Kong’s GDP in 2023, supporting around 5,200 jobs and generating HK$1.3 billion in tax revenues. The economic advisory firm predicted that tax reforms would bolster Hong Kong’s position as a leading spirits hub in Asia and aiding the city’s recovery from the pandemic. Hong Kong's commerce minister's comments last week suggest that these predictions are starting to come true for the region, less than six months after the reforms came into effect. Yau said he hoped Hong Kong can "become the global trading hub for Chinese baijiu". Baijiu producers, many of which are hugely successful in their home market, are looking to expand sales abroad. Chinese liquor giant Kweichow Moutai released a statement on 2 January announcing that it expects its 2024 revenue to rise around 15% to CNY173.8 billion (£18.9bn), meeting the company’s targets. Moutai and fellow baijiu giant Wuliangye are both targeting international growth.