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Posted: Monday, March 03 2008. 10:47

HK Withdraws Import Duty on Wine

Hong Kong government has announced a complete withdrawal of import duty on wine and beer in the Union Budget announced by the Finance Secretary on February 27, keeping the duties on spirits unchanged.

The budget has significance in that not only the waiver will help improve wine consumption, the government's thumbs down to the spirits lobby for the elimination of import taxes, signifies government focus on the benefits of wine as a health beverage and to help reduce the alcohol consumption.

The duty cuts, which have come into immediate effect, were announced during the maiden budget speech of the finance secretary John Tsang. A major factor of motivation is also to create a wine trading and distribution centre in the country, according to press sources.

Last year the duties were reduced from 80% to 40% following high-level representations over many years by wine-exporting countries, and had the support of the Hong Kong hospitality and tourism industry.

In a related move, the secretary also announced the elimination of the Hotel Administration Tax, HAT of 3% to encourage the tourism industry.

European Spirits Organisation (CEPS) has expressed its disappointment and claims that leaving out spirits from the exemption was fairly unique. A statement by the Director General, Jamie Fortescue says the organisation sees no reason for the government to exclude spirits from the focus and would look to resume lobbying over the matter.

Withdrawing the duty on wine and beer is expected to cost the government treasury about HK$560m ($72m) a year, according to official figures in the speech.

Despite the CEPS' complaints, the spirits industry has enjoyed relative success in recent times through campaigning to reduce the level of customs charges for their products in Asia, including India.

Last month, the EU said it would open dialogue with WTO over its concerns regarding custom duty in Thailand. The CEPS alleges that the customs authorities in the country began rejecting tariff values set by the importers since September 2006 and started taking higher estimates for calculations arbitrarily.

Such approach to calculating custom duty, which establishes tax and duty value on imported products, is a breach of the WTO Customs Valuation Agreement, according to the CEPS.

DelWine has written enough about their recent victory in India last July through the pressure from EU and the US, with the withdrawal of additional duties (ACD) on wine and spirits.

The budget announcement in Hong Kong of waiving off duties on wine and leaving them untouched for spirits, is in sharp contrast with Maharashtra excise policy which slapped and additional 200% state duty on wines, reducing the same from 150% to 75% on spirits, giving rise to speculation that the spirits lobby had made an offer that the state government could not refuse.

       

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