On 19 January 2024, the Hong Kong Inland Revenue Department declared the Inland Revenue (Amendment) (Tax Deductions for Spectrum Utilization Fees) Ordinance 2024. This ruling has been published in the Official Gazette and introduces tax deductions for mobile network operators and companies for spectrum utilization fees. This incentive is expected to increase investment in the development and improvement of telecommunications services in Hong Kong.

“Thanks to the passage of the relevant bill by the Legislative Council on January 10, we successfully implement the proposal in the 2023-24 Budget to provide greater incentives for MNOs to invest in mobile communications services by bidding of radio spectrum to further improve network quality. The general public can thereby enjoy better communications services, and Hong Kong can be supported more effectively in the development of high-end and innovative technologies, facilitating our economic development in the long run,” a spokesman for the Commerce and Economic Development Bureau said.

Under the Amendment Ordinance, the SUF payable by MNOs for the radio spectrum to be acquired in the future is to be fully deductible, and the tax deduction will be spread over the spectrum assignment term (which is generally 15 years). The Amendment Ordinance has no retrospective effect and is only applicable to the SUF incurred from the spectrum acquired on or after today. In other words, the SUF payable in respect of radio spectrum assigned in the past, whether they are already paid or to be paid, remain not tax deductible.

The Government will continue to facilitate the development of 5G in Hong Kong through a series of measures, including the timely provision of more radio spectrum to the market through auctions for the provision of mobile communications services. It is the Government’s plan to conduct auctions for the spectrum in the 850/900 MHz, 2.3 GHz and the newly launched 6/7 GHz bands within this year to make available a total of 510 MHz of radio spectrum for public mobile communications services.