Aircraft Leasing Tax Regime

On the enactment of the Inland Revenue (Amendment) (No. 3) Ordinance 2017 in July 2017, sections 14G to 14N of the Inland Revenue Ordinance are introduced to provide tax concessions to qualifying aircraft lessors and qualifying aircraft leasing managers in Hong Kong. In general, qualifying aircraft lessors are entitled to a tax concession under which only 20% of the net lease rentals are assessed to compensate for their non-entitlement to depreciation allowance on the aircraft. The profits derived by qualifying aircraft lessors and qualifying aircraft leasing managers from qualifying activities are charged at 8.25%, i.e. one-half of corporate Profits Tax rate.

Details of the Department’s views and practice on the tax concessions for qualifying aircraft lessors and qualifying aircraft leasing managers are set out in Departmental Interpretation and Practice Notes No. 54 – Taxation of Aircraft Leasing Activities.

If the qualifying aircraft lessors and qualifying aircraft leasing managers require proof of resident status for the purposes of claiming tax benefits under the Comprehensive Double Taxation Agreements / Arrangement (“DTA”), please complete the appropriate form IR1313A (with the Mainland of China as DTA partner) or IR1313B (with other DTA partners) and furnish the form to this Department.

For any enquiries on tax reporting procedures, assessing practice, or application of Certificate of Resident status in relation to the aircraft leasing tax regime, please call 2594 1288.