On 22 July 2022, the Inland Revenue Department of Hong Kong published in the Gazette “Inland Revenue (Amendment) (Tax Concessions for Certain Shipping-related Activities) Ordinance 2022” to provide half-rate profits tax concessions (i.e. at a tax rate of 8.25 per cent) to qualifying shipping commercial principals (i.e. ship agents, ship managers and ship brokers) so as to implement the 2021 Policy Address initiative on growing the maritime business. Tax concessions will apply to sums received by or accrued to shipping commercial principals on or after April 1, 2022.
The newly introduced tax measures will provide economic incentives for qualifying ship agents, ship managers and ship brokers to operate in Hong Kong. As these businesses serve to facilitate ship ownership and operation, which also generate demand for other maritime business services, fostering the development of shipping commercial principals in Hong Kong is conducive to the growth of our shipping business and maritime cluster.”
In addition, under the Ordinance, the profits derived by a qualifying shipping commercial principal from carrying out a qualifying activity for an associated shipping enterprise, which is entitled to a concessionary tax rate or income exemption under the Inland Revenue Ordinance, will be subject to the same concessionary tax rate or income exemption as those applicable to the associated shipping enterprise. The Ordinance has built in anti-abuse provisions to safeguard the integrity of the tax system and comply with the latest international tax rules.
