Inland Revenue (Amendment) (Tax Concessions for Shipping-related Activities and Physical Commodity Trading) Bill 2026 to be gazetted on Friday
The Inland Revenue (Amendment) (Tax Concessions for Shipping-related Activities and Physical Commodity Trading) Bill 2026 will be published in the Gazettethis Friday(June 12) to amend the Inland Revenue Ordinance (Cap. 112) to enhance the existing tax concessions for shipping-related activities and to introduce a new half-rate tax concession regime for physical commodity trading.
To facilitate the compliance of in-scope multinational enterprise groups with the BEPS (Base Erosion and Profit Shifting) 2.0 requirements - a new tax reform package formulated by the Organisation for Economic Co-operation and Development (OECD) - the Government proposes to introduce an additional option of a 15 per cent concessionary tax rate in the preferential tax regimes for shipping-related companies to elect on an annual basis, which will help save their compliance costs in completing the complex tax calculations under BEPS2.0 regarding their operations in Hong Kong.
In addition, to attract commodity traders to Hong Kong to propel the maritime services sector towards a more vibrant trajectory, the Bill proposes to provide a new half-rate profits tax concession for physical commodity trading, echoing the industry's calls to strengthen the local maritime services ecosystem. The aforementioned 15 per cent concessionary tax rate option also applies to the half-rate tax concession regime for physical commodity trading.
The Transport and Logistics Bureau, Photo source: reference image
A spokesperson for the Transport and Logistics Bureau said, "A favourable tax regime is a key factor in attracting shipping-related companies to Hong Kong. In light of changes in international tax rules, the Government has reviewed the existing tax concessions for shipping-related activities and proposed making enhancements in compliance with international tax rules, including the introduction of tax deduction arrangements in line with international standards, while ensuring that Hong Kong's preferential tax regimes for shipping-related activities maintain their competitiveness after the implementation of BEPS 2.0, thereby sustaining the development momentum of the high value-added maritime services industry in Hong Kong.
"Commodity traders form an integral part of the maritime services ecosystem and are key users of maritime services. The proposed new tax concession regime for commodity trading will give Hong Kong a distinct advantage in attracting commodity traders to set up or expand their businesses in Hong Kong, thereby injecting demand and impetus into the maritime services industry, and unlocking substantial new growth opportunities for our city in forging ahead with the vision of becoming a global maritime capital," the spokesperson added.
Since 2020, the Government has launched and been actively promoting a series of tax concessions to encourage more shipping-related companies to establish or expand their presence in Hong Kong, yielding tangible results. For the years of assessment 2020/21 to 2023/24, the number of qualifying ship lessors benefiting from the tax concessions has soared by five times.
Since the introduction of the aforementioned tax concessions, there have been new changes in the international tax landscape. In response to base erosion and profit-shifting risks arising from the digitalisation of the economy, the OECD has formulated BEPS 2.0. To implement this new tax reform package, Hong Kong has introduced the Hong Kong Minimum Top-up-Tax under the Inland Revenue Ordinance to require an in-scope multinational enterprise group to pay a top-up tax as from 2025 if the effective tax rate of the tax paid by its constituent entities in Hong Kong is less than 15 per cent.
The Bill will be introduced into the Legislative Council for first reading on June 24.
Photo source: reference image
