The Hong Kong Special Administrative Region government on Wednesday served a notice to the Legislative Council to move a resolution under the Hotel Accommodation Tax Ordinance (HATO) to resume the collection of hotel accommodation tax, which has been reduced to 0 percent since 2008.

As per a government estimate, the tax will bring an estimated annual revenue of about HK$1.1 billion to the government, providing a stable source of revenue without affecting members of the general public.

READ MORE: SAR budget eyes growth amid fiscal consolidation

The tax to be collected only accounts for less than 1 percent of the spending by overnight visitors in Hong Kong, the government said in a notification.

The government said the tax collection won’t affect visitors' choice of Hong Kong as a travel destination or their spending sentiment in the city 

It will not affect visitors' choice of Hong Kong as a travel destination or their spending sentiment in Hong Kong, it added.

Under the ordinance, hotel accommodation tax is imposed on hotel and guesthouse accommodation and is levied on the accommodation charges payable by guests to hotel or guesthouse proprietors. Since July 1, 2008, such tax rate has been reduced from 3 percent to 0 percent.  

In the 2024-25 Budget, the financial secretary proposed to resume the collection of the hotel accommodation tax at a rate of 3 percent with effect from Jan 1, 2025, as part of the comprehensive fiscal consolidation program to restore fiscal balance in a few years' time.

The secretary for financial services and the treasury will move the relevant resolution pursuant to section 3(2) of the HATO at the Legislative Council on Oct 23. The resolution will be published in the Gazette on Oct 25, according to the government notification.  

ALSO READ: Tsui says HK hotel industry very attractive for investors

Since the announcement of the proposal on hotel accommodation tax collection resumption in this year’s Budget, the Financial Services and the Treasury Bureau, and the Inland Revenue Department have been reaching out to the hotel and guesthouse industry to facilitate them in understanding operational arrangements regarding the tax collection and preparing for compliance.

The IRD has also been providing assistance by organizing briefings for industry practitioners, disseminating relevant information via letters and its website, as well as setting up a dedicated inquiry hotline and a dedicated helpdesk at the Inland Revenue Centre, according to the government.