The import duty on spirits has been cut from 100% to 10% in an attempt to boost the economy

Hong Kong has slashed its import duty on premium liquor from 100% to 10% in an attempt to boost the economy. The step was announced on Wednesday in a policy address by the Chinese region’s chief executive, John Lee.

The move comes after the Chinese government earlier this month imposed anti-dumping duties of up to 39% on brandy imports from the EU, following tariffs announced by the bloc on Chinese electric vehicles. Hong Kong is a special administrative region of China and has a degree of autonomy.

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The region’s new low duties apply to drinks of the most expensive brands with more than 30% alcohol content and priced over $26 for a portion.

Lee said the slashing of duties aims to promote the liquor trade, drive tourism, and aid the development of industries such as logistics and storage, as part of a broader effort to “boost the economy and improve people’s livelihood.” 

Hong Kong took a similar step in 2007, when the region’s government halved the 80% duty on wine before ditching it entirely a year later. The move resulted in Hong Kong becoming what has been described as “the heart of Asia’s wine trade” and one of the largest wine auction centers in the world.

Hong Kong’s economy grew by 3.3% in the second quarter of 2024 from a year earlier, the government said earlier this month. The region’s real GDP is forecast to increase between 2.5% and 3.5% this year, after posting 3.2% growth in 2023.

The region’s 100% tax on spirits was one of the highest in the world. The Southeast Asian nation of Laos is one of the few countries with an even higher tax on spirits of 110%, The Telegraph wrote on Wednesday, citing research from Oxford Economics.

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In mainland China, the rate is between 15% and 25%. In Russia, import duties on spirits stand at 20%.