Excise tax
Excise tax in Hong Kong is duty charged on liquor, tobacco, hydrocarbon oil and methyl alcohol.
March 2024 | Published by Xero
Published Thursday 6 August 2026
Table of contents
Key takeaways
- Excise tax in Hong Kong is charged as duty on four dutiable commodities: liquors, tobacco, certain hydrocarbon oil, and methyl alcohol.
- Hong Kong is a free port with no general customs tariff and no GST or VAT, so excise duty is the main exception that businesses need to plan for.
- Since 16 October 2024, liquor above 30% alcohol by volume is charged 100% duty on the first HK$200 of value and 10% on the portion above HK$200, while wine and liquor at 30% or below are charged 0%.
- You need a licence from the Customs and Excise Department to import, export, manufacture, or store duty-unpaid dutiable goods, and failing to comply carries heavy penalties.
What is excise tax?
Excise tax is a tax on specific goods that a government singles out, usually to raise revenue or to discourage consumption of products it regulates for health or environmental reasons. In Hong Kong it is charged as a duty on a short list of goods, whether those goods are imported or made locally.
Hong Kong is a free port and does not levy any customs tariff on general imports and exports (Hong Kong Customs and Excise Department), and it has no GST or VAT (Financial Services and the Treasury Bureau). Excise duty is the narrow exception, so for most businesses it is the one indirect tax that affects the cost of the goods they buy or sell. Understanding it is part of good small business accounting.
What counts as a dutiable commodity in Hong Kong?
The Customs and Excise Department collects duty on four types of dutiable commodities under the Dutiable Commodities Ordinance (Cap. 109). If your goods fall outside these categories, no excise duty applies. The four categories are:
- liquors
- tobacco, excluding smokeless tobacco and alternative smoking products
- certain hydrocarbon oil, such as petrol and diesel
- methyl alcohol
Duty applies to these goods whether they are imported or manufactured in Hong Kong (Hong Kong Customs and Excise Department).
Types of excise duty: specific and ad valorem
Excise duty is charged in one of two ways, and Hong Kong uses both depending on the commodity. Knowing which method applies helps you work out the cost before you buy or import.
- Ad valorem duty is a percentage of the goods’ value. Hong Kong charges liquor above 30% alcohol on this basis.
- Specific duty is a fixed amount per unit, litre, or kilogram. Hong Kong charges tobacco, hydrocarbon oil, and methyl alcohol this way.
Who pays excise duty in Hong Kong?
Excise duty is paid by the importer or manufacturer of the dutiable goods, and duty is due when the goods are removed from the importing carrier or a bonded warehouse into the local market. Anyone importing, exporting, manufacturing, or storing duty-unpaid dutiable goods needs a licence from the Customs and Excise Department, and a permit is required to remove them, so it pays to sort this out while registering your business.
Although the business pays the duty, the cost is usually built into the retail price. So even if you do not import or make these goods, you feel the effect when you buy or resell products such as fuel or spirits.
Hong Kong excise duty rates
Rates depend on the commodity and are set out by the Customs and Excise Department. For liquor above 30% alcohol by volume (measured at 20°C), a two-tier system took effect on 16 October 2024: 100% duty on the first HK$200 of value and 10% on the portion above HK$200 (HKSAR Government). Wine, and other liquor at 30% alcohol or below, are charged 0% (Hong Kong Customs and Excise Department).
The specific rates for the remaining commodities are:
- cigarettes: HK$3,306 per 1,000
- cigars: HK$4,258 per kilogram
- Chinese prepared tobacco: HK$811 per kilogram
- other manufactured tobacco: HK$4,005 per kilogram
- unleaded petrol: HK$6.06 per litre; leaded petrol: HK$6.82 per litre; aircraft spirit: HK$6.51 per litre
- light diesel oil and Ultra Low Sulphur diesel: HK$2.89 per litre; Euro V diesel: HK$0.00 per litre
- methyl alcohol: HK$840 per hectolitre, plus HK$28.10 per hectolitre for every 1% the alcoholic strength exceeds 30%
You can confirm the current figures on the Customs and Excise Department rate schedule, as rates can change.
Excise duty and Hong Kong’s free-port system
Hong Kong’s free-port model shapes how duty works. Because there is no general customs tariff and no GST or VAT, most goods move in and out without any tax at the border.
Excise duty is the exception that applies to the four dutiable commodities. That makes it different from places with a broad consumption tax, where duty and a sales tax or VAT stack on almost everything.
Excise duty vs customs duty
The terms excise duty and customs duty are easy to mix up, but the difference matters when you plan costs. Excise duty in Hong Kong applies to the four dutiable commodities whether they are imported or made locally, so a local distiller and an importer of spirits both face it.
A general customs tariff, by contrast, is a charge on imports that many countries apply broadly, and Hong Kong does not levy one. For a business dealing in dutiable goods, the duty forms part of your landed cost and feeds straight into your cost of goods sold.
Why excise duty matters to your business
If you make, import, or trade in dutiable goods, excise duty affects your margins and your compliance obligations. Getting on top of it early protects both your pricing and your cash position.
- Pricing: duty can be a large share of the final price, so build it into your pricing strategy to protect your margins.
- Compliance: holding a licence brings reporting and payment duties, and failing to hold a required licence or permit carries a maximum penalty of a HK$2,000,000 fine and 7 years’ imprisonment, with an added fine of up to 10 times the duty payable where there is intent to evade (Hong Kong Customs and Excise Department).
- Cash flow: duty is paid before goods reach the market, so keep your cash flow forecasts current to cover it.
Manage your Hong Kong business finances with Xero
Staying on top of excise duty is one part of running a compliant, profitable business. Xero brings your costs, expenses, and tax obligations into one place, so you can record duty against supplier bills, track your true landed cost, and see your cash position in real time. You can get one month free and see how Xero makes managing your Hong Kong business finances easier.
FAQs on excise tax
Here are answers to common questions about excise duty in Hong Kong.
Does Hong Kong have GST or a sales tax?
No. Hong Kong is a free port with no GST, VAT, or general customs tariff (Financial Services and the Treasury Bureau). Excise duty on the four dutiable commodities is the main indirect tax on goods.
What goods are subject to excise duty in Hong Kong?
Only four categories: liquors, tobacco (excluding smokeless tobacco and alternative smoking products), certain hydrocarbon oil, and methyl alcohol. Everything else enters and leaves Hong Kong duty-free.
How much is duty on spirits in Hong Kong?
For liquor above 30% alcohol by volume, duty is 100% on the first HK$200 of value and 10% on the portion above HK$200. Wine and liquor at 30% alcohol or below are charged 0%.
Do small businesses need a licence to sell dutiable goods?
You need a Customs and Excise Department licence to import, export, manufacture, or store duty-unpaid dutiable goods, and a permit to move them. Selling duty-paid goods bought from a licensed supplier does not require its own licence.
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Disclaimer
This glossary is for small business owners. The definitions are written with their requirements in mind. More detailed definitions can be found in accounting textbooks or from an accounting professional. Xero does not provide accounting, tax, business or legal advice.