New Hong Kong tax regime for aircraft leasing

On 10 March 2017, the Hong Kong Government gazetted the Inland Revenue (Amendment) (No.2) Bill 2017.

The Bill proposes a new concessionary tax regime for aircraft leasing market which:

  • introduce a profits tax rate of 8.25% for the assessable profits derived from qualifying aircraft leasing activities and qualifying aircraft leasing management activities carried out in Hong Kong;

  • deem the taxable amount of profits derived by a qualifying aircraft lessor from leasing of aircraft to a non-Hong Kong aircraft operator to 20% of the gross rentals less deductible expenses, excluding tax depreciation allowance; and

  • define the range of qualifying aircraft leasing management activities for the above concessionary tax treatment and certain anti-abuse rules.

The Bill was introduced into the Legislative Council for approval and is expected to apply from year of assessment 2017/18.