As a result, today some of the world’s largest ship financiers are the Chinese ship leasing houses supporting both shipowners and the nation’s shipbuilding industry.
Making sure that it stays ahead with these developments Hong Kong has introduced new tax incentives for ship leasing.
On 19 June 2020, the Inland Revenue (Amendment) (Ship Leasing Tax Concessions) Ordinance 2020 (the Ordinance), which introduces concessionary tax regimes for qualifying ship lessors and ship leasing managers, was passed.
The new tax regime applies to revenue received on or after 1 April 2020. Under the new scheme the tax rate on the qualifying profits of ship lessors carrying out operating lease and finance lease activities, including subleasing and sale and leaseback arrangement, will be 0%. On the other hand, the tax rate on the qualifying profits carrying out ship leasing management activities for ship lessors will be 0% and 8.25% for associated companies and non-associated companies, respectively. Partnering with Invest Hong Kong and the Hong Kong Maritime and Port Board (HKMPB), Seatrade Maritime has sought to explore the benefits of the initiative through a public webinar and interviews with senior representatives from the maritime industry about the benefits the new concession will bring.
Kenneth Lam, Chairman & CEO of Credit Agricole Asia Shipfinance Limited, highlights in an interview how Section 23B of the Inland Revenue Ordinance has provided the shipping community with the certainty and stability it has required in tax matters for many years. “But times have changed, 23B has served us very well, but because of new regulations, and also different business models of shipping, we need certain improvements on the tax regime. So this ship leasing scheme is a perfect complement to what we have in 23B to provide the certainty so owners can continue to base their fleets in Hong Kong,” Lam explains.
In an interview ship manager, Bjorn Hojgaard, CEO of Anglo-Eastern Univan Group, sees a positive impact from the regulation for the wider shipping business community in Hong Kong. “I can see a situation where if especially Chinese leasing companies use Hong Kong as a home for financing and expansion of shipping, the Hong Kong based ship managers will be able to grow on the back of that expansion.”
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