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13 December 2022 Hong Kong issues trade consultation paper proposing enhancements to aircraft leasing tax concession regime
Under the current Hong Kong aircraft leasing tax preferential regime, qualifying aircraft lessors and aircraft leasing managers in Hong Kong are taxed at the 8.25% concessionary tax rate. There is also a tax base concession whereby the deemed taxable income from aircraft leasing is calculated at 20% of net rental income in lieu of the tax depreciation allowance. The Hong Kong Government issued a trade consultation paper on 22 November 2022 proposing various enhancements to the current regime: Replacing the 20% tax base concession with a one-off 100% tax deduction of the acquisition cost of aircraft, subject to a claw back mechanism upon disposal No denial of the 20% tax base concession / proposed one-off 100% tax deduction under specified scenarios Relaxing the current stringent interest deduction rules in respect of interest payable on money borrowed to finance the acquisition of aircraft Introducing specified substantial activities thresholds in terms of qualified employees and operating expenditure in Hong Kong to comply with requirements of the Organisation for Economic Co-operation and Development
Document ID: 2022-6202 | |