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).

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.

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.