Bottling line in Tequila factory. Credit: Jesus Cervantes / Shutterstock

Hong Kong is hoping to boost its spirits trade after lowering tax on spirits.

Effective immediately, the territory has slashed tax from 100% to 10% on bottles of liquor with an alcoholic strength of more than 30% that are priced above HKD200 ($25.73).

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Spirits priced at or below HKD200 will remain subject to the existing 100% tax rate.

The new duty rates will only apply on bottles of up to one litre. If a larger container is used, the duty payable will be calculated on a “value per litre” basis.

Hong Kong is hoping to boost the category in the same way its wine trade gained impetus when a similar tax cut was introduced back in 2008.

It is also hoping the initiative will aid the wider tourist sector.

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The move was announced by Chief Executive John Lee today (16 October) in his 2024 policy address.

A government spokesman said, “Hong Kong has been adopting a simple ad valorem duty system on liquor since 1994. Given the experience in waiving wine duty in 2008, a reduction of liquor duty should similarly promote high-end liquor trade, thereby giving impetus to the development of other high value-added sectors such as logistics and storage, tourism as well as high-end food and beverage consumption, creating more job opportunities and bringing overall benefits to society.

“With the introduction of a two-tier system with different duty rates based on value, we believe that the proposal has struck a balance between facilitating the liquor business and guarding public health against binge drinking as a result of the reduction in liquor duty.”

The Hong Kong government previously said wine imports jumped 80% in a year after duties were abolished in 2008. The city welcomed hundreds of new wine-related businesses.