Hong Kong ship lessors are anticipating a significant improvement of their global market share following the introduction of a long-awaited Hong Kong government tax concession, Seatrade Maritime News reported on 28 August.
The Hong Kong (Special Administrative Region) Government’s Inland Revenue (Amendment) (Ship Leasing Tax Concessions) Ordinance 2020 (the Ordinance) came into effect on 19 June 2020 and installs concessionary tax regimes for qualifying ship lessors and ship leasing managers.
The Ordinance follows a tax concessions policy for aircraft leasing businesses in Hong Kong. This new tax regime will be applicable to revenue received either on or after 1 April 2020.
Qualifying profits of ship lessors carrying out operating lease and finance lease activities, such as subleasing and sale and leaseback arrangement, will see a tax rate of 0%.
Meanwhile, the tax rate on the qualifying profits of ship leasing management activities for ship lessors for associated and non-associated companies, will be 0% and 8.25% respectively.
Benjamin Wong, head of maritime cluster of Invest Hong Kong, Government of the Hong Kong Special Administrative Region, told Seatrade Maritime News: “For ship leasing, the [Hong Kong] government is actually planning or forecasting that in 10 years’ time we should be able to capture about 12% of the world’s market – something we are quite confident about.
“In terms of the gravitational pull from shipping and ship leasing, they are much stronger than aviation.
“Hong Kong also has a strong financial market to support leasing activities and we are confident that we can be as successful, if not more successful, than our aircraft leasing,” Wong told Seatrade Maritime News.
Bill Guo, executive director of shipping at ICBC Leasing, told Seatrade Maritime News: “With the new tax scheme, we can and could do more in Hong Kong, including setting up subsidiary companies. It is a good opportunity for mainland Chinese companies to access more talented people in Hong Kong, as the majority of Chinese leasing companies are now based in Beijing, Shanghai and Shenzhen.”
Rosita Lau, partner at Ince & Co, told the news service about the “retrospective effect” of the tax regime. “If profits earned from that day [1 January 2020] had been in compliance, then you can enjoy the new tax concessions,” she said.
Seatrade Maritime News is published by Informa Markets Maritime, whose parent company is UK-based Seatrade Communications Ltd.