'HK Eyes Tax Cuts For Sanctions-hit Shipping Sector'

The government may offer tax cuts to shipowners to attract them to Hong Kong as the local shipping industry battled the fallout from the US suspension of an agreement sparing them double taxation.

That's according to lawmakers from the pro-business Liberal Party on Wednesday who met with Chief Executive Carrie Lam on her upcoming policy address.

"So I understand the government, after introducing the tax reduction for the maritime insurance and also the ship-leasing arrangement, they may consider to go ahead with the tax reduction for the maritime business, like people like the shipowners, ship-management companies as well as those commodities traders and trying to attract them to come to Hong Kong," transport sector lawmaker Frankie Yick said.

"Now, by doing so, that will of course counteract some of the impact by the unilateral cancellation of the DTA [avoidance of double taxation] by the United States government."

In August, Washington suspended the bilateral agreement for the DTA, for shipping companies, as part of President Donald Trump’s executive order to terminate trade privileges under the Hong Kong Policy Act of 1992 after Beijing enacted a national security law in the SAR.

Those in the trade have warned that the US move would drive up cost, with shippers already feeling the pinch amid the Covid-19 pandemic. But Willy Lin, chairman of the Hong Kong Shippers' Council, had said then that it will mostly hit US shippers and not Hong Kong companies and other international firms.

On possible further help to businesses in the policy blueprint next month, the Liberal Party tried to temper expectations after its meeting with the Chief Executive.

While calling for relief for businesses such as waiving rents for two months and rates for six months, party chairman and catering sector lawmaker Tommy Cheung said it would be difficult for the government to spend more after handing out several rounds of Covid-19 relief measures to the tune of billions of dollars.

"The lower your expectation, the lower your disappointment," Cheung said.