On 27 October 2017, the IRD released Departmental Interpretation and Practice No. Note 54 – Taxation of Aircraft Leasing Activities (“DIPN 54” (PDF 284 KB)). DIPN 54 clarifies various tax issues concerning the application of the new concessionary tax regime for aircraft leasing which was introduced in July 2017. To recap, the main tax concessions are as follows:
The business of aircraft leasing is complex, so there were a number of matters that required clarification as to how the new tax concession would be applied in practice. DIPN 54 addresses many practical concerns by providing the following guidance.
The clarifications in DIPN 54 are welcomed. They resolve many uncertainties that were raised by concerned parties. Overall, the regime is a welcome change and represents another step in the Government’s efforts to promote Hong Kong as a leading global financial centre. KPMG welcomes these efforts. We hope we will continue to see additional reforms to Hong Kong’s tax laws to continue to make Hong Kong an attractive place to establish new businesses.