The concessionary tax regime for certain aircraft leasing activities was enacted on 28 June 2017. The new rules will apply from the 2017/18 year of assessment.
To recap, the main benefits of the proposed regime are two-fold:-
This legislation is a welcome development because it will enable Hong Kong to take its place on the world stage as one of the premier locations for basing aircraft leasing activities. In particular, Hong Kong’s advantages of its proximity to the PRC and its “best in class” tax treaty with the PRC make it a natural place for offshore leasing of aircraft to PRC airlines.
As with any new law, there are certain details that will need to be resolved as lessors look to apply the law in practice. The Hong Kong Inland Revenue Department (IRD) has indicated that it will provide guidance on the application of the new regime through a Departmental Interpretation and Practice Note.
Hopefully, this note will be issued shortly and will address some practical issues. What are the issues that need to be clarified?
Overall, the new tax regime represents another step in the Government’s efforts to promote Hong Kong as a leading global financial centre. KPMG welcomes these efforts. Hopefully, we will continue to see more reforms of Hong Kong’s tax laws to make Hong Kong increasingly attractive for establishing new businesses.