Ministerial fight over Chinese luxury tax

The China Ministry of Commerce is inclined to eliminate the around 30 % tax on luxury goods driving Chinese shoppers to Hong Kong and Paris however the Chinese Ministry of Finance is distrusting this plan because it threatens tax revenues

The outcome of this battle is not yet decided but it might be beneficial to the luxury goods industry and would add to their margins but be of great negative impact to Hong Kong counting around 28.1 million Chinese visitors in 2011 or around 66 % of all visitors. Such visitors spent about HKD 253 billion (roughly USD 32.6 million) in 2011 and contributed 13.4 % of the GDP. Therefore the creation of luxury zones in urban Chinese centers would affect Hong Kong retailers terribly. But it would be welcomed by the growing Chinese middle class not wanting to go through the hassle and expense of a trip to Hong Kong.

The Chinese luxury goods market amounted in 2011 to USD 46.9 billion and thereof USD 27.1 billion was spent abroad.