Hong Kong dropped its 100% spirits tax to just 10% this month in an attempt to stimulate tourism and generate revenue from high value whisky’s huge potential. But what does it mean for the whisky industry as a whole? I reached out to a few professionals with different interests in the Hong Kong market to find out how they felt about the changes.
Untapped Potential
The Asian whisky market is estimated at $33.8 billion. Yet up until last week, Hong Kong had one of the highest rates of duty on high-strength alcohol in the world. Any spirit over 30% ABV had been subject to a 100% import tax. While this was initially implemented to reduce the risks of binge drinking, once the global popularity of whisky started to emerge, it had unexpected consequences on the ability to create and maintain a domestic whisky market.
East and Southeast Asia is a hugely significant area for scotch whisky. In its most recent annual report, the Scotch Whisky Association revealed that “Asia-Pacific continued to dominate as Scotch Whisky’s largest regional market by value in 2023, supported record value exports to China, a market up 165% on 2019, and value uplifts Singapore (19%) and Taiwan (8%).” Despite being a significant financial hub, the 100% tax meant that Hong Kong was disproportionately underrepresented in those figures. This news is expected to change that in the coming years.
How Has Whisky Tax Changed In Hong Kong?
In October 2024, Chinese territory’s Chief Executive John Lee announced that the 100% tax on spirits over 30% ABV would be amended in favor of a tiered system. Importantly, the 100% import tax remains on spirits up to HK$200 (approximately US$26) in order to discourage binge drinking. However, for whatever portion of the price exceeds HK$200, the tax rate drops to 10%.
Under the new system if a HK$200 bottle is imported, the tax is also HK$200 and the sale price is HK$400 (around US$52), the same as before. If a bottle is imported at HK$500, the first HK$200 is taxed at 100% (HK$200), and the remaining HK$300 is taxed at 10% (HK$30), so the sale price is HK$730 (about $94), which is a HK$270 ($35) saving over the previous system.
For a HK$2,000 bottle, previously the total price would have been HK$4,000 ($510). Now it will be HK$2,380 (just over $300). You’ll notice that the savings disproportionately benefit high value bottles and this is the aspect that is particularly important for the primary and secondary markets. The new system has been implemented specifically to benefit the fine and rare, luxury side of spirits—whether it be whisky or baijiu.
A New Whisky Hub For East Asia
Tom MacLaren, Head of Business Development at specialist online auction house Whisky Auctioneer, believes that “the recent news about Hong Kong’s excise duties is a significant moment for whisky enthusiasts both in the region and globally. With its world-class whisky venues and a highly engaged audience, Hong Kong is set to become even more influential in shaping whisky culture and appreciation.”
Ultra premium bottles like Black Bowmore will see their import duties from from over $15,000 to less than $2,000
Mark Littler LTD
It’s not the first time that Hong Kong has taken the decision to cut taxes to stimulate a particular market. Back in 2008, they removed wine duty completely, and Hong Kong has since become a globally renowned wine trading hub, comparable to the likes of New York and London. The new tariffs bring whisky in line with wine for the region, and while the changes won’t just impact the whisky market, it is exciting news across the industry.
“We see this as an extremely positive development—not only should it lower barriers for a new generation of whisky buyers, but also enable us to offer even greater value to our clients across Hong Kong and Asia with access to the world’s greatest whiskies.”
Easier Access For Collectors
Governments always have a fine balance to uphold with taxes on things like alcohol; too low and they risk encouraging poor health habits, but too high and people will find alternatives. The reality of the whisky market in Hong Kong is that many whisky collectors may not see much change in the prices they’re paying. It will make it easier for them to get hold of their favorite whiskies, however.
It’s no surprise that whisky collectors and drinkers in Hong Kong have historically sought ways to avoid the regions high alcohol duties. A common method was to ship purchases to nearby locations with lower taxes, such as Taiwan, Singapore, or Macau, where duties are typically around 8-12%. Travelers would then bring the whisky back to Hong Kong.
Ultimately that means that the new system isn’t going to save local collectors much money. But it will make a big difference to official tax revenue, and that’s what governments ultimately care about.
Simulation For Local Destinations
Finally I reached out to Diego Lanza, former Head of Spirits at Bonhams Hong Kong, who after years working with fine and rare whisky in the retail and auction side of things, left to open his own whisky bar in Hong Kong, OBE Whisky. I asked him how he felt the changes would impact the bar scene in Hong Kong.
Diego Lanza believes Hong Kong’s tax cut will invigorate the bar scene, allowing whisky bars to offer better selections at competitive prices.
OBE Whisky
“This is fantastic news for Hong Kong’s bar scene. Lowering the spirits tax puts us on a level playing field with other major cities. Now bars and shops can offer a their selection of amazing whiskies at more competitive prices moving forward. This will attract more whisky enthusiasts and perhaps create more whisky lovers and collectors and help Hong Kong become a true hub for whisky lovers.”
So there we have it, three insights into the tax changes in Hong Kong. It is an exciting time for the spirits industry as a whole, because of course the changes do not just impact whisky. From baijiu to bourbon and tequila to cognac, all high strength spirits over around $26 will benefit from the changes. I look forward to analyzing the impacts on the secondary whisky market over the coming months.