Resumption of Hotel Room Tax Collection from Next Year - Hong Kong Treasury Bureau: No Harm to Hong Kong's Tourism Competitiveness

The Hong Kong government has proposed in the financial budget to resume the collection of hotel room tax starting on January 1 next year, with a tax rate of 3%. The Hong Kong Treasury Department stated that overnight visitors spend an average of approximately HK$6,900 in Hong Kong in 2023, with hotel accommodation accounting for 24.5% of their total expenditure in Hong Kong. The estimated 3% hotel room tax is about HK$51, which is less than 1% of their total expenditure in Hong Kong. This will not affect the spending intentions of visitors in Hong Kong, nor discourage potential visitors from coming to Hong Kong. The Hong Kong government had previously provided notice to the Legislative Council regarding the resumption of the hotel room tax. The Financial Services and Treasury Bureau of Hong Kong posted on social media that the tax is aimed at stabilizing government revenue without compromising Hong Kong's competitiveness in tourism. The Hong Kong Treasury Department pointed out that the number of visitors to Hong Kong has continued to increase in the first five months of this year. By the end of May, the total number of visitors to Hong Kong reached 18 million, a 78% increase compared to the same period last year, with 13.8 million visitors from mainland China, an increase of about 74% compared to the same period last year. This shows that the news of the resumption of the hotel room tax in Hong Kong has not deterred visitors from coming to Hong Kong. The Hong Kong Treasury Department stated that levying hotel room tax and value-added tax on hotel accommodation is a common practice in the international community. Many countries or regions that rely on tourism as a key economic pillar, such as Macau, China, Japan, South Korea, and Malaysia, have similar tax systems in place. The tax rate for hotel room tax in Hong Kong is generally lower compared to other places. The Hong Kong Inland Revenue Department has introduced the operation arrangements for collecting hotel room tax to the industry, including holding two briefing sessions in May with approximately 280 industry professionals in attendance. The Hong Kong Treasury Department and the Inland Revenue Department have also met with representatives from relevant chambers of commerce and stakeholders multiple times, taking into account the opinions and suggestions of industry professionals on compliance matters, in order to minimize compliance costs for the industry.