Hong Kong, 18 Jan 2017 - In today's 2017 Policy Address, Hong Kong Chief Executive C.Y. Leung announced "The Government plans to introduce a bill into LegCo this year to amend the Inland Revenue Ordinance to offer tax concessions so as to attract companies to develop aircraft leasing business in Hong Kong."
Today's announcement is welcome and long-anticipated news for the aircraft leasing service industry. According to forecasts by Airbus, demand for new aircraft worldwide between now and 2035 will be 33,000 with a value of approximately US$5.2 trillion. 40% of new aircraft deliveries will be to the Asia Pacific region, compared to a combined total of 37% for new deliveries to Europe and North America. As a result, many lessors are looking to establish an Asian hub for their aircraft leasing business.
"Hong Kong is already a well-established financial centre in Asia," said Clarence Leung, Asset Finance and Leasing Director at PwC Hong Kong. "Aircraft finance and leasing will be an additional piece of the jigsaw of financial services in the territory. It will provide new job opportunities and attract highly skilled people to Hong Kong."
PwC believes it is important that the proposed new tax concessions are competitive relative to other aircraft leasing hubs, such as Ireland and Singapore, in order to attract aircraft lessors to Hong Kong. "Many countries are now putting the OECD's Base Erosion and Profit Shifting (BEPS) initiatives into place as they reform their domestic tax legislation," said Catherine Tsang, Tax Partner at PwC Hong Kong. "It is vital that the proposed new tax concessions in Hong Kong are BEPS-compliant in order to ensure that they are well received by the international tax community."
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