On June 19, 2020, the long-awaited Inland Revenue (Amendment) (Ship Leasing Tax Concessions) Ordinance 2020 (the Ordinance), which introduces concessionary tax regimes for qualifying ship lessors and ship leasing managers, finally came into effect.

The Ordinance is a follow-up of the well-received tax concessions policy for aircraft leasing businesses in Hong Kong, and the new tax regime applies to revenue received on or after April 1, 2020.

The Ordinance

i. Tax rate

The tax rates for qualifying ship lessors and ship leasing managers will be as follows:

Hong Kongs new regime for ship leasing tax concessions - table 1
#Note: i.e. half of the current profits tax rate for corporations.

ii. Ships

The Ordinance targets ships in general (including barges, air-cushion vehicles, and dynamically supported crafts) but excludes junks, vessels propelled by oars, and military vessels. It also does not appear to cover seaborne units, such as offshore drilling rigs, which are not capable of navigating in water.

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