Hong Kong Drops Tax Breaks on EVs
February 23, 2017 Taxation in Hong Kong
On February 22nd the Finance Secretary of Hong Kong Paul Chan Mo-po announced that the government will be drastically cutting back on the tax exemption offered on the registration of electric vehicles, as such vehicles have become popular enough to no longer warrant heavy tax breaks.
Private vehicles being registered in Hong Kong are levied with a tax based on the value of the car, with the first HKD 150 000 of a car’s value taxed at 40 percent, with 70 percent charged on the next HKD 150 000, an additional 100 percent on the next HKD 200 000, and a final 115 percent on the remaining value.
Electric vehicles have been exempt from the taxes since 1994.
However, the exemptions on electric vehicles have now been reduced to only the first HKD 97 500 of tax payable.
It is estimated that due to the change, the tax increase on the cheapest Tesla car available in Hong Kong would be HKD 300 000, while the most luxurious model would rise by as much as HKD 1 000 000.
It has been reported previously that Tesla represents over 80 percent of all electric vehicles in the city, which also has the highest density of Tesla chargers in the world, and has been described as “beacon city for electric vehicles” by the CEO of Tesla, Elon Musk.