LegCo Bills Committee considers proposal to support aviation leasing industry in Hong Kong

Proposed new tax rate would make Hong Kong more attractive than other aircraft leasing hubs - PwC

Hong Kong, 26 Apr 2017
- In the second meeting of the Bills Committee on Inland Revenue (Amendment) (No. 2) Bill 2017 held today, representatives from the Transport and Housing Bureau; the Financial Services and Treasury Bureau (FSTB) and Inland Revenue Department (IRD) took questions from members of the Legislative Council and from professional and public bodies, as well as aviation industry participants including PwC.

“We are pleased that the proposed Bill was given a positive reception by the committee,” says Clarence Leung, Asset Finance and Leasing Director at PwC Hong Kong. “Given the ease of access to Mainland China, Hong Kong is uniquely well-placed to become an aircraft leasing hub. The excellent financial, legal and aviation infrastructure all recommend Hong Kong to international aircraft lessors.”

The rapid development of China’s aviation industry has triggered a growing demand for new aircraft.  According to the research paper titled “Aviation Leasing: Leverage Hong Kong’s Strengths” published by PwC Hong Kong in 2015, PwC estimated that the number of aircraft to be managed in Hong Kong would be over 3,000 with a value of approximately US$91 billion in the next 20 years, based on aircraft manufacturers’ forecasts.

Aircraft leasing is not just an asset financing business. It also demands an in-depth understanding of the various segments of the global aviation business. The business is knowledge intensive and global in nature. Business executives in the aircraft leasing industry have to build up global connections and business ties with people along the whole supply chain of aviation and aerospace industries.

PwC argues that the establishment of Hong Kong as a major aircraft leasing hub will help to promote and consolidate Hong Kong’s position as a global business and financial centre, and to create job positions for the future generations.

Under the proposed tax regime, the effective tax rate in Hong Kong will be significantly lower than other major aircraft leasing hubs.  The proposed tax regime would encourage international aircraft lessors and investors to set up businesses in Hong Kong. It may also encourage them to list in Hong Kong - thereby delivering further benefits to the local economy.

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