Macao to Abolish Imported Wine Taxes

Macao has presented the draft on “ tax free alcohol ” after Hong Kong abolished imported wine ( and beer ) taxes on Feb. 27th this year, which will likely impact distributors and consumers in the rest of China, especially increase wine smuggling- related crimes.

Why will Macao abolish alcohol tax?

Tang zhijian, the spokesman of Macao government said that the “ tax free alcohol ” policy aims to reduce the inflation in Macao.

The Consumer Price Index of Macao in the first half year went up 9 per cent than a year earlier. If the draft is passed, the inflation of Macao will drop 0.3% .

Meanwhile, data showed that scrapping the tax on wine helps Hong Kong become the world’s third biggest hub for wine auctions after London and New York. It is estimated that sales by Hong Kong’s “ wine trading and distribution businesses ” may rise as much as HK$10 billion in 2012 due to the change.

The draft presented by Macao is similar to Hong Kong.

Tax-free policy will rise wine smuggling problems from Macao into Mainland

Macao “ tax- free alcohol ” policy will affect China mainland market significantly. There is an added incentive for people to hand carry (especially with expensive wines as the savings per bottle will be high) or smuggle wine from Hong Kong and Macao into China.

A person who did not give his name said that a lot of imported wines are smuggled from Macao into China, Macao has been regarded as wine smuggling center.

However, the person said , “ If China mainland market keep wine prices at a reasonable level, and have a sound consumption culture, smuggling–related crimes will be reduced dramatically. ”

The person did not comment if China mainland will make the same reduction in wine duties.