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1.
Q:
When will be the resumption of collection of the Hotel Accommodation Tax (“HAT”)?
2.
Q:
What are the meanings of “hotel” and “accommodation”?
A:
Under the Hotel Accommodation Tax Ordinance (Cap. 348), the HAT is levied on all accommodation charges made by a hotel. According to the ordinance, “hotel” means “any establishment, the proprietor of which holds out to the extent of his accommodation that he will provide accommodation to any person presenting himself who is able and willing to pay a reasonable sum for the services and facilities provided and is in a fit state to be received”.
“Accommodation” means “any furnished room or suite of rooms hired by the proprietor of the hotel to guests, or for the use of guests, for lodging and includes such furnishings, appliances and fittings as are normally provided therein”. Therefore, the payments for furnishings, appliances and fittings provided in a hotel room will be included in the calculation of the HAT.
3.
Q:
Will any hotel be exempted? Will a hotel operated by a non-profit making organization be eligible for the exemption?
A:
According to the Hotel Accommodation Tax Ordinance (Cap. 348), a hotel containing less than 10 rooms normally available for lodging guests; or accommodation being provided by a society not established or conducted for profit will be excluded from the charge of the HAT.
4.
Q:
How will the HAT be calculated?
A:
The HAT is levied at the rate of 3% on all accommodation charges, which are the sum payable by or on behalf of a guest for the accommodation received. However, the normal 10% service charge is generally exempted from the HAT.
Example
If the room rate and 10% service charge are $1,000 and $100 respectively, the HAT is $30, which is calculated as below:
$1,000 × 3% = $30.00
5.
Q:
Assuming that the effective date of the resumption of the HAT is 1 January 2025, if a hotel room is booked for the period from 31 December 2024 to 3 January 2025, how will the HAT be calculated?
A:
Out of the three hotel room nights, only the accommodation charge for the two room nights on 1 and 2 January 2025 is chargeable to the HAT.
Taking the accommodation charge of a room is $1,000 per night as an example, the HAT is $60 (i.e. $1,000 × 2 × 3%).
A:
According to the Hotel Accommodation Tax Ordinance (Cap. 348), the HAT is levied on all accommodation charges made by a hotel or a guesthouse.
"Accommodation charge" means "the sum payable by or on behalf of guests for accommodation received"; "Accommodation" means "any furnished room or suite of rooms hired by the proprietor of the hotel to guests, or for the use of guests, for lodging and includes such furnishings, appliances and fittings as are normally provided therein".
Hence, the accommodation charge includes all charges generally payable for providing hotel accommodation (such as extra beds / cribs, and holiday / themed decorations).
10% service charge (normally 10% of the accommodation charge), in-house dining expenses, various charges for hotel facilities (such as SPA massage, chauffeur-drive and beauty), the business centre (such as printing, fax, photocopying and rental of conference rooms), concierge (such as tickets booking, restaurants reservation and car rental services), and additional charge for consumable items are not required to be included in the calculation of the HAT.
7.
Q:
Will service apartments be subject to the HAT?
A:
In general, unless specifically exempted, the HAT is charged on all establishments falling within the meaning of “hotel” under the Hotel Accommodation Tax Ordinance (Cap. 348), regardless of whether they are labelled as hotels, guesthouses or service apartments. For certain types of long-term accommodation which have clear characteristics of not being accommodation provided to a “guest”, the Inland Revenue Department (“IRD”) generally accepts that they are excluded from the charge of the HAT. However, each case has to be determined on its own merits.
8.
Q:
If a hotel operates both hotel business and service apartment business simultaneously, do these two business types both need to pay the HAT?
A:
Where a hotel provides both short-term and long-term accommodation and satisfies certain conditions of running two separate and distinct lines of business (e.g. there is documentary evidence supporting the company’s policy in running two different lines of business, adequate books and accounts are maintained in respect of the two separate and distinct lines of businesses for audit purposes, there are rooms designated for long-term accommodation which must not be frequently changed and the tenure of each long-term accommodation must be at least 28 continuous days with no refund for early termination, etc.), the business of long-term accommodation will be exempted from the charge of the HAT.
9.
Q:
If there is a need to change the rooms designated for long-term accommodation, when should the hotel manager notify the IRD of the changes?
A:
The hotel manager should notify IRD of any changes to the designated rooms in writing not less than one month before the changes.
10.
Q:
If a guest initially hires a room for 3 days from a hotel, but later extends the hiring period to 3 months, is the guest required to move to a designated long-term accommodation room for satisfying the operating requirements of the “two separate and distinct lines of business”?
A:
If a hotel’s long-term accommodation business has been granted a concessionary exemption from payment of the HAT, then the guest must be required to move to a room designated for long-term accommodation in order to comply with the specified operating requirements.
11.
Q:
When a hotel room is hired out through an online travel agent (“OTA”), the room rate displayed by the OTA may be different from the actual amount received by the hotel (after deduction of commission by the OTA). Which amount should be charged for the HAT?
A:
If a guest books a hotel room through the OTA, the HAT shall be calculated based on the room rate provided by the hotel to the OTA, which is before the deduction of the commission fee paid for the OTA’s services. Thus, the manner in which the OTA collects the commission fee (whether it involves the total amount received from guests being paid to the hotel and then the OTA collecting the commission fee, or a lesser sum after deducting the commission fee being paid to the hotel) is irrelevant to the calculation of the HAT.
Example 1:
The room rate provided by a hotel to an OTA is $1,000, plus 10% service charge $100 and the HAT $30. The OTA pays a total amount of $1,130 to the hotel, and in return receives a commission fee of $113 (10%). The HAT is calculated as below:
$1,000 × 3% = $30.00
Example 2:
The room rate provided by a hotel to an OTA is $1,000, plus 10% service charge $100 and the HAT $30, in a total sum of $1,130. The OTA pays to the hotel a net amount of $1,017, which is after deduction of the commission fee $113 (10%). The HAT is calculated as below:
$1,000 × 3% = $30.00
Example 3:
Same as Example 1, if the OTA offers a discount of $20 to the guest, the room rate is reduced to $980. The commission fee (10%) received by the OTA is $91, which is calculated as below:
$113 - ($1,000 - $980) × 110% = $91.00
Under this circumstance, the HAT shall be calculated based on the room rate provided by the hotel to the OTA, and thus the discount offered by the OTA only affect the amount of its commission income, but not the HAT.
A:
As the points or cash coupons have money’s worth which can be used as money, the equivalent value of the points or cash coupons is chargeable to the HAT. For instance, if a guest pays the accommodation charge of $1,000 by cash of $900 and a cash coupon of $100, the HAT is calculated based on $1,000.
If the accommodation is received by a guest through redemption of the points but the room rate is not specified, the HAT will be calculated on the price of the accommodation of the same grade of room on the date of stay at the time of making the redemption. Hotels must keep all information about the price of the accommodation for future inspection.
13.
Q:
If the accommodation in a hotel is sold in the form of a package (i.e. an inclusive price covering the accommodation charge, dining, spa, etc.), how will the HAT be calculated?
A:
The HAT is calculated based on the accommodation charge that has been disclosed by the hotel when marketing its package deals. If the accommodation charge is not disclosed, the HAT will be calculated by reference to the price of the accommodation of the same grade of room on the date of stay at the time of selling the package. Hotels must keep all information about the price of the accommodation for future inspection.
14.
Q:
Are hotels required to disclose the accommodation charge separately on the bill issued to guests for every package deal?
A:
According to the Hotel Accommodation Tax Ordinance (Cap. 348), a hotel or a guesthouse is required to pay the HAT based on the accommodation charge payable by guests. The operators need to state clearly the amount of the HAT received or that the amount received is inclusive of HAT on the bills issued to guests to substantiate the basis for calculation of the HAT.
15.
Q:
If a guest fails to show up to check-in, or pay the accommodation charge for accommodation received, does the hotel proprietor need to pay the HAT?
A:
Under the Hotel Accommodation Tax Ordinance (Cap.348), accommodation charge means the sum payable by or on behalf of guests for accommodation received. If a guest does not show up to check-in, it means that the guest has not received accommodation. Under such circumstance, the hotel proprietor does not need to pay the HAT.
If a guest fails to pay the accommodation charge, the hotel proprietor does not need to pay the HAT for the accommodation.
A:
If a hotel enters into a contract with a service provider or product supplier to provide to the latter a specified number of hotel room nights in return for the supply of the services or products, the HAT will generally be levied on the contract price that has been mutually agreed by the parties. If there is no mutually agreed price, the HAT will be calculated on the price of the accommodation of the same grade of room on the date of stay at the time of making such contract or booking the room.
Depending on the facts of each individual case, if a hotel room is provided as complimentary accommodation to a KOL in return for the promotional services rendered by the KOL, such promotional services are considered as money’s worth equivalent to payment for the accommodation charge in money. Thus, the hotel proprietor is required to pay the HAT for the accommodation.
When a contract is entered into with a KOL, whether in verbal or written form, the HAT will be levied on the price of the accommodation that has been specified in the contract. If the room rate is not specified in the contract, the price of the accommodation of the same grade of room on the date of stay at the time of making such contract or booking the room will be used for calculation of the HAT instead.
Hotels must keep all information about the price of the accommodation for future inspection.
17.
Q:
If a hotel room is provided as complimentary accommodation to an overseas guest of the Hong Kong Tourism Board for promoting Hong Kong, does the hotel proprietor need to pay the HAT?
A:
Depending on the facts of each individual case, it will not be considered as an exchange for services with money’s worth since the guest has not rendered any services for the hotel. Under the circumstances, the hotel proprietor does not need to pay the HAT in respect of the hotel room.
18.
Q:
If a hotel room is provided as accommodation for the use of its employees, is this arrangement required to be reported and the HAT required to be paid?
A:
If a hotel is provided as accommodation to its employees for short-term stay (e.g., under adverse weather conditions) or as staff quarters, although no HAT is chargeable, the hotel is still required to report the relevant information to IRD for record purposes. When the rooms are used as staff quarters, the information reported in the HAT return should include the room number, the period, the occupant’s name, and the related file number of the Employer’s Return. For short-term stay of its employees, the information reported should include the date of occupancy and the number of rooms involved. Hotels must keep all information about the usage of the accommodation for future inspection.
19.
Q:
When should the HAT return be filed?
A:
Subject to the enactment of the legislation, the Collector of Stamp Revenue (the “Collector”) will issue the first quarterly HAT return to the managers of hotels / guesthouses on 2 January 2025. For the subsequent quarters, the Collector will issue the quarterly HAT returns on the first working day of April, July, October and January in each year.
The managers of hotels / guesthouses should sign the quarterly HAT return and send it to the Collector within 14 days after the quarters ending on 31 March, 30 June, 30 September and 31 December in each year.
20.
Q:
When should the HAT be paid?
A:
The hotel proprietor shall pay to the Collector, within 14 days after 31 March, 30 June, 30 September and 31 December in each year, the amount of the HAT payable in respect of the quarters ending on those dates.
21.
Q:
The manager of every hotel is required to send the quarterly HAT return within 14 days after the end of each quarter by the IRD. Is it possible to extend the 14-day requirement?
A:
According to the Hotel Accommodation Tax Ordinance (Cap. 348), the proprietor of every hotel shall pay to the Collector, within 14 days after 30 September, 31 December, 31 March and 30 June in each year, the amount of the tax payable in respect of the 3 monthly periods ending on those dates and at the same time the manager of that hotel shall sign and send to the Collector a return setting out the total amount of accommodation charges made by the proprietor of the hotel during the period in respect of which the tax paid relates. The ordinance does not empower the Collector to extend the deadline for submitting the quarterly HAT return.
22.
Q:
How does a hotel proprietor pay the HAT?
A:
The proprietor of every hotel may make the payment of the HAT through the following methods:
| (i) | use electronic means; |
| (ii) | send a crossed cheque made payable to “The Government of the Hong Kong Special Administrative Region” or “The Government of the HKSAR” to the Collector of Stamp Revenue; or |
| (iii) | visit the Inspection Section on 3/F of the Inland Revenue Centre in person and request the issue of a demand note with QR Code for payment of the HAT via the Faster Payment System or for payment in cash at the Stamp Office, post offices or convenience stores. Please note that the daily cash payment at post offices must be below $120,000. |
23.
Q:
When will the inspection be carried out by the IRD? Which types of documents are to be inspected?
A:
Tax Inspectors of IRD will periodically carry out inspections at hotels to check on the accommodation charges paid by guests to ensure that the correct amount of the HAT has been paid by the hotel proprietors. For this purpose, the records to be inspected by the tax inspectors include the guest register, the occupied rooms report, the guest ledger, and the daily room sales report.
To prepare for the re-imposition of the HAT, the tax inspectors will conduct pre-inspection visits before 1 January 2025.
24.
Q:
What is the penalty for late payment of the HAT or late submission of the quarterly HAT return?
A:
The Collector may initiate prosecution actions in case there is late payment of the HAT or late submission of the quarterly HAT return.