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2017 FRT Renewal

DITB

Charged.hk co-founder
Nov 13, 2012
1,581
36
Hong Kong
HK FRT - what comes after 1-4-2014?

The FRT exemption was extended five years in 2009 (which means last chance is March 31st, 2014 as it stands).

Where to go from here?

HK will want FRT on EVs as well, eventually, but how? It is not just about imports - it is also about responsibility. Your ICE generates pollution, burns fossils and is an expense in many other ways, to society. Hopefully, in not too long time, EVs will compete with ICEs in a way where no incentives will be necessary. Until then, we need "FRT Exemptions" and other tools, to help the EVs on it's way into society. After all, it is a benefit to all people in HK, when the air gets cleaner.


The next 5 years forward could be one of the following options:

1) Gradual FRT exemption reduction

Calculation of the normal FRT, then applying the following factor

2014: 0% FRT
2015: 10% FRT
2016: 20% FRT
2017: 30% FRT
2018: 40% FRT
2019: 50% FRT
2020-: 100% FRT

i.e. if calculated FRT to be paid is 1,000,000 HKD, it would for an EV imported in 2017 be only 300,000 HKD (30% of 1,000,000 HKD)

This puts an incentive into buying an EV earlier, rather than later, as each year, the FRT increases.


2) Pollution-based FRT

A revised set of FRT calculation rules are brought into effect, whereas the consumption of diesel, petrol or gas is classified into categories A to G, A being the leanest. This would not consider the price or the weight of the car - only one thing: How much does it consume/pollute for each km? This class can be used both on FRT, as well as annual costs of having a car registered in HK. In many countries, rules like these are already in force, and if sufficiently steep, reducing pollution tremendously.

- A huge Rolls-Royce would cost a lot in taxes (as it does already), a lot at the pump and a lot in yearly fees.

- An EV would cost few taxes, be cheap to recharge and cost a nominal fee every year.

Burning fossils goes beyond the price you pay to buy it - the pollution is breathed not only by yourself, but everyone around you, and the CO2 released is into our common atmosphere.
 

markwj

Moderator, Asia Pacific
Apr 10, 2011
4,603
1,216
Hong Kong
Given the number of EVs on the road today (300+), I reckon they should just extend 0% FRT on 100% EVs for another N years. Finance impact to government coffers is negligible, but it sends a big positive message and will help adoption.

The problem up to now has been that the cars haven't really been available, and the scheme abused by some local distributors in their pricing. More cars (coming now) will solve both these problems.
 

sonywong

Member
May 1, 2012
312
0
I though the FRT exemption on EV is new, but i was wrong. HK government exempted FRT on EV since 1994. So I think we will see 0% FRT for another N years. They have renewed it couple times, sometimes 3 years and some times 5.

source:

LCQ8: Electric vehicles


Given the number of EVs on the road today (300+), I reckon they should just extend 0% FRT on 100% EVs for another N years. Finance impact to government coffers is negligible, but it sends a big positive message and will help adoption.

The problem up to now has been that the cars haven't really been available, and the scheme abused by some local distributors in their pricing. More cars (coming now) will solve both these problems.
 

moarfish

Member
Sep 29, 2012
52
0
Hong Kong
I think the extension of the waiver will be announce in the 2014-2015 Budget from our Government Financial Secretary. Just like the case in year 2009. Let us wait until March 2014
 

markwj

Moderator, Asia Pacific
Apr 10, 2011
4,603
1,216
Hong Kong
I think the extension of the waiver will be announce in the 2014-2015 Budget from our Government Financial Secretary. Just like the case in year 2009. Let us wait until March 2014

The issue there is that several hundred people will soon be asked to finalize their car configurations and commit to purchase, with a delivery date around that time. Effectively asked to finalize without knowing if it will cost HK$600k or HK$1.2m.

In such a circumstance, I would have to defer - and I suspect many others would too.
 

markwj

Moderator, Asia Pacific
Apr 10, 2011
4,603
1,216
Hong Kong
I heard an interesting question recently regarding this.

Is the amount of vehicle first registration tax rate payable in Hong Kong based on the date of the order, first registration, or delivery?

I always assumed first registration, but now not so sure. What happens if you order a car, then the government increases the rate (at budget time) before delivery. Anyone know for sure?
 

sonywong

Member
May 1, 2012
312
0
I heard an interesting question recently regarding this.

Is the amount of vehicle first registration tax rate payable in Hong Kong based on the date of the order, first registration, or delivery?

I always assumed first registration, but now not so sure. What happens if you order a car, then the government increases the rate (at budget time) before delivery. Anyone know for sure?

Normally is based on the registration date, I ordered my car in 2010 and got the car in March 2011(when the government proposed the new tax rate). I paid the new tax but many politicians think this is unfair to car owners who order cars before the government announced the new tax. At the end only cars ordered or delivered after they announced the new tax are subject to the new tax rate and I got some refund from the government.

Arrangement for First Registration Tax of Private Cars
 

markwj

Moderator, Asia Pacific
Apr 10, 2011
4,603
1,216
Hong Kong
Normally is based on the registration date, I ordered my car in 2010 and got the car in March 2011(when the government proposed the new tax rate). I paid the new tax but many politicians think this is unfair to car owners who order cars before the government announced the new tax. At the end only cars ordered or delivered after they announced the new tax are subject to the new tax rate and I got some refund from the government.

Arrangement for First Registration Tax of Private Cars

Interesting. So, have we all ordered or merely reserved? I guess when we lock in our configurations it becomes an order.

I remember the case around the time you mention of that official who purchased his car just before the increase and was accused of using his inside knowledge to avoid the tax.
 

pinguhk

Member
Sep 23, 2014
296
0
hong kong
Why would they wave it if there is too many cars on the road.
This is 1 why to cut less car on the road.
I hope it is still free tax by then.

- - - Updated - - -

Presumably. But, as has been pointed out - we don't even know who the Chief Executive will be then.
yeah if the new Chief Executive don't drive then we in deep trouble lol 278
 

Optic

Member
Nov 10, 2014
198
14
Hong Kong
If they discontinue the tax exemption, then i guess its possible that our second hand Tesla can be sold at higher price than which we bought it at. Which is actually a good reason to lay down a X deposit. Kind of makes sense to take away complete subsidy on a car that costs > $800k. Some tax exemption makes sense, but I don't know about 100% tax exemption.
 

Vmax

Member
Mar 1, 2014
601
9
Hong Kong
If there is no or just a little tax exemption, the whole EV market in HK will collapse. The majority of people buy a Tesla because the good value in HK and not because it's an EV. Furthermore I doubt in higher resale value if the tax exempt is scrapped.
.... my two cents ...
 

markwj

Moderator, Asia Pacific
Apr 10, 2011
4,603
1,216
Hong Kong
Let's resurect this thread. We're almost have way through the 3 year extension already.

- - - Updated - - -

Some comments, from a legislation point of view:

Last time this was renewed, we learnt that:
a) If nothing is done, the incentive will expire automatically.
b) The legislation allows for a simple vote in legco to change/extend the date.
c) New legislation would be required to change the terms (e.g. sliding scale, cap, etc). That is an extensive process.

Given what we know of the government policy in HK, I find (a) very unlikely. The government policy is to promote EVs, and a complete scrapping of the incentive will seriously impact the market for EVs here. The government recently scrapped the incentives for hybrids, in favour of pure EVs.

So, given the April 2017 date, my opinion is that we would have to see the legislative process start early in 2016 (at the very latest) if option (c) was to be proposed. Even earlier if they are going to conduct consultations. If we see nothing happen, say mid 2016, then we can be pretty assured the government is heading towards option (b).

That said, I really hope that they don't leave it to the last minute like 2014. I realise that this is a budgetary process and secrecy is important, but the arrangements last time led to a huge amount of uncertainty in the market and that was not good for the confidence in EVs.
 

jsiu

Member
Mar 28, 2015
164
12
Hong Kong
Thanks Mark, for your analysis. i believe promoting EV is still government policy but the subject is now changed to press down the growth of private cars. Therefore, i have no idea what the government is going to do in the FRT with EV.
 

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