HK plans tax concession to commodities trading firms: Chan
TL;DR
Hong Kong plans a 50% tax concession for qualifying commodity trading firms, reducing profits tax to 8.25% to boost its role as a regional hub. The initiative, effective from 2025/26, includes eligibility criteria and supports maritime sector measures.
Tags
HK plans tax concession to commodities trading firms: Chan
Hong Kong Announces Tax Concession for Commodity Trading to Boost Market Development
Hong Kong plans to introduce a 50% tax concession for qualifying physical commodity trading activities, aiming to strengthen its position as a regional trading hub. Financial Secretary Paul Chan Mo-po confirmed the initiative during the LME Asia Metals Seminar, stating the legislation will be tabled by year-end and enacted by mid-2026. The measure is part of broader efforts to develop a commodity trading ecosystem, leveraging Hong Kong's strategic proximity to mainland China, the world's largest metals consumer.
Under the proposed regime, qualifying traders will face a reduced profits tax rate of 8.25%—half the standard 16.5% rate—on assessable profits from eligible activities. Enterprises subject to the OECD's BEPS 2.0 tax reform framework will also have the option to pay 15% instead of 8.25%. Eligibility criteria include minimum annual turnover, use of local maritime services, and compliance with economic substance requirements.
The initiative aligns with recent expansions by the London Metal Exchange (LME), which added seven Hong Kong warehouses to its global network this year, enhancing storage access to mainland industrial centers. LME CEO Matthew Chamberlain noted that 85% of the exchange's metal stocks are now held in Asia, underscoring the region's growing importance in global commodity flows.
Hong Kong's government also announced complementary measures to support the maritime sector, including relaxed tax rules for ship leasing and deductions for vessel acquisition costs. These changes aim to reduce compliance burdens under BEPS 2.0 while promoting local infrastructure usage.
The tax concessions, effective from the 2025/26 tax year, reflect Hong Kong's strategy to attract commodity trading firms amid rising demand for physical metal exchanges between China and global markets. By combining fiscal incentives with enhanced logistics infrastructure, the city seeks to solidify its role as a bridge between mainland producers and international traders.
SCMP, February 2025: SCMP, February 2025
EY, Technical Briefing, 2025: EY, Technical Briefing, 2025
