Hotel Accommodation Tax

The collection of HAT will resume on 1 January 2025.

Under the Hotel Accommodation Tax Ordinance (Cap. 348), the HAT is levied on all accommodation charges made by a hotel. According to the ordinance, “hotel” means “any establishment, the proprietor of which holds out to the extent of his accommodation that he will provide accommodation to any person presenting himself who is able and willing to pay a reasonable sum for the services and facilities provided and is in a fit state to be received”.

“Accommodation” means “any furnished room or suite of rooms hired by the proprietor of the hotel to guests, or for the use of guests, for lodging and includes such furnishings, appliances and fittings as are normally provided therein”. Therefore, the payments for furnishings, appliances and fittings provided in a hotel room will be included in the calculation of the HAT.

According to the Hotel Accommodation Tax Ordinance (Cap. 348), a hotel containing less than 10 rooms normally available for lodging guests; or accommodation being provided by a society not established or conducted for profit will be excluded from the charge of the HAT. Any hotel that is exempt from HAT is not required to collect HAT from guests.

The HAT is levied at the rate of 3% on all accommodation charges, which are the sum payable by or on behalf of a guest for the accommodation received, irrespective of whether the charges are calculated on a daily or hourly basis. However, the normal 10% service charge is exempted from the HAT. Please refer to Q6 for more details.

Example

If the room rate and 10% service charge are $1,000 and $100 respectively, the HAT is $30, which is calculated as below:

$1,000 × 3% = $30

Out of the three hotel room nights, only the accommodation charge for the two room nights on 1 and 2 January 2025 is chargeable to the HAT.

Taking the accommodation charge of a room is $1,000 per night as an example, the HAT is $60 (i.e. $1,000 × 2 × 3%).

According to the Hotel Accommodation Tax Ordinance (Cap. 348), the HAT is levied on all accommodation charges made by a hotel or a guesthouse.

"Accommodation charge" means "the sum payable by or on behalf of guests for accommodation received"; "Accommodation" means "any furnished room or suite of rooms hired by the proprietor of the hotel to guests, or for the use of guests, for lodging and includes such furnishings, appliances and fittings as are normally provided therein".

Hence, the accommodation charge includes all charges generally payable for providing hotel accommodation (such as extra beds / cribs, and holiday / themed decorations / late check-out).

10% service charge (normally 10% of the accommodation charge), in-house dining expenses, various charges for hotel facilities (such as spa massage, chauffeur-drive and beauty), the business centre (such as printing, fax, photocopying and rental of conference rooms), concierge (such as tickets booking, restaurants reservation and car rental services), and additional charge for consumable items are not required to be included in the calculation of the HAT.

In general, unless specifically exempted, the HAT is charged on all establishments falling within the meaning of “hotel” under the Hotel Accommodation Tax Ordinance (Cap. 348) when rooms are provided to guests, regardless of whether they are labelled as hotels, guesthouses or service apartments. For a service apartment which have clear characteristics of not being accommodation provided to a “guest” (e.g. a service apartment that is not provided as a sleeping accommodation, which is excluded from the application of the Hotel and Guesthouse Accommodation Ordinance (Cap. 349)), the Inland Revenue Department (“IRD”) generally accepts that they are excluded from the charge of the HAT. However, each case has to be determined on its own merits. The service apartment is required to keep sufficient records to reflect its mode of operation.

Where a hotel provides both short-term and long-term accommodation and satisfies certain conditions of running two separate and distinct lines of business (e.g. there is documentary evidence supporting the company’s policy in running two different lines of business, adequate books and accounts are maintained in respect of the two separate and distinct lines of business for audit purposes, there are rooms designated for long-term accommodation which must not be frequently changed and the tenure of each long-term accommodation must be at least 28 continuous days with no refund for early termination, etc.), the business of long-term accommodation will be exempted from the charge of the HAT.

The application should be made at least one month before the intended commencement date of the long-term accommodation business, along with the supporting documents, including but not limited to tenancy agreement template, sample of recently signed tenancy agreements (if any), promotional brochures, rental receipts, monthly rates sheets, room allocation plan, documentary evidence showing the company’s policy to run two different lines of business, and any other documents in support of the current mode of operation.

The hotel manager should notify IRD of any changes to the designated rooms in writing not less than one month before the changes.

If a hotel’s long-term accommodation business has been granted a concessionary exemption from payment of the HAT, then the guest must be required to move to a room designated for long-term accommodation in order to comply with the specified operating requirements.

If a guest books a hotel room through a travel agent (including an OTA), the HAT shall be calculated solely based on the room rate provided by the hotel to the travel agent. For example, if the room rate provided by the hotel to the travel agent is $1,000, irrespective of the any other charges or discount to be included in the price displayed by the travel agent, the HAT shall be calculated based on $1,000, i.e. $1,000 × 3% = $30.

Apart from those items agreed between the hotel and OTA, the booking statement should clearly show the accommodation charge (room rate) provided by the hotel and the amount of the HAT. For the purpose of computing the HAT, discount (if any) agreed by the hotel are deductible from the room rate and the revised room rate should be used for calculation of the HAT. However, discount offered by the OTA for its own business purpose is a non-deductible item.

As the points or cash coupons have money’s worth which can be used as money, the equivalent value of the points or cash coupons is chargeable to the HAT. For instance, if a guest pays the accommodation charge of $1,000 by cash of $900 and a cash coupon of $100, the HAT is calculated based on $1,000.

If the accommodation is received by a guest through redemption of the points but the room rate is not specified, the HAT will be calculated on the price of the accommodation of the same grade of room on the date of stay at the time of making the redemption. Hotels must keep all information about the price of the accommodation for future inspection.

Regardless of how the room is booked, the bill issued to guests must state clearly the amount of the HAT received or that the amount received is inclusive of the HAT so that the IRD can verify whether the HAT is correct.

The HAT is calculated based on the accommodation charge that has been disclosed by the hotel when marketing its package deals. If the accommodation charge is not disclosed or the accommodation in the package is marketed as free, the HAT will be calculated by reference to the price of the accommodation of the same grade of room on the date of stay at the time of selling the package. Hotels must keep all information about the price of the accommodation for future inspection.

The operators need to state clearly the amount of the HAT received or that the amount received is inclusive of HAT on the bills issued to guests to substantiate the basis for calculation of the HAT so that the IRD can verify during inspection.

Under the Hotel Accommodation Tax Ordinance (Cap.348), accommodation charge means the sum payable by or on behalf of guests for accommodation received. If a guest does not show up to check-in, it means that the guest has not received accommodation. Under such circumstance, the hotel proprietor does not need to pay the HAT.

If a guest fails to pay the accommodation charge, the hotel proprietor does not need to pay the HAT for the accommodation.

If a hotel enters into a contract with a service provider or product supplier to provide to the latter a specified number of hotel room nights in return for the supply of the services or products, the HAT will generally be levied on the contract price that has been mutually agreed by the parties. If there is no mutually agreed price, the HAT will be calculated on the price of the accommodation of the same grade of room on the date of stay at the time of making such contract or booking the room.

Depending on the facts of each individual case, if a hotel room is provided as complimentary accommodation to a KOL in return for the promotional services rendered by the KOL, such promotional services are considered as money’s worth equivalent to payment for the accommodation charge in money. Thus, the hotel proprietor is required to pay the HAT for the accommodation.

When a contract is entered into with a KOL, whether in verbal or written form, the HAT will be levied on the price of the accommodation that has been specified in the contract. If the room rate is not specified in the contract, the price of the accommodation of the same grade of room on the date of stay at the time of making such contract or booking the room will be used for calculation of the HAT instead.

Hotels must keep all information about the price of the accommodation for future inspection.

Depending on the facts of each individual case, it will not be considered as an exchange for services with money’s worth since the guest has not rendered any services for the hotel. Under the circumstances, the hotel proprietor does not need to pay the HAT in respect of the hotel room.

If a hotel is provided as accommodation to its employees for short-term stay (e.g., under adverse weather conditions) or as staff quarters, although no HAT is chargeable, the hotel is still required to report the relevant information to IRD for record purposes. When the rooms are used as staff quarters, the information reported in the HAT return should include the room number, the period, the occupant’s name, and the related file number of the Employer’s Return. For short-term stay of its employees, the information reported should include the date of occupancy and the number of rooms involved. Hotels must keep all information about the usage of the accommodation for future inspection.

The Collector of Stamp Revenue (the “Collector”) will issue the first quarterly HAT return to the managers of hotels / guesthouses on 2 January 2025. For the subsequent quarters, the Collector will issue the quarterly HAT returns on the first working day of April, July, October and January in each year.

The managers of hotels / guesthouses should sign the quarterly HAT return and send it to the Collector within 14 calendar days after the quarters ending on 31 March, 30 June, 30 September and 31 December in each year.

The hotel proprietor shall pay to the Collector, within 14 calendar days after 31 March, 30 June, 30 September and 31 December in each year, the amount of the HAT payable in respect of the quarters ending on those dates.

According to the Hotel Accommodation Tax Ordinance (Cap. 348), the proprietor of every hotel shall pay to the Collector, within 14 calendar days after 30 September, 31 December, 31 March and 30 June in each year, the amount of the tax payable in respect of the 3 monthly periods ending on those dates and at the same time the manager of that hotel shall sign and send to the Collector a return setting out the total amount of accommodation charges made by the proprietor of the hotel during the period in respect of which the tax paid relates. The ordinance does not empower the Collector to extend the deadline for submitting the quarterly HAT return.

The proprietor of every hotel may make the payment of the HAT through the following methods:

Tax Inspectors of IRD will periodically carry out inspections at hotels to check on the accommodation charges paid by guests to ensure that the correct amount of the HAT has been paid by the hotel proprietors. For this purpose, the records to be inspected by the tax inspectors include the guest register, the occupied rooms report, the guest ledger, and the daily room sales report.

To prepare for the resumption of collection of the HAT, the tax inspectors will conduct pre-inspection visits before 1 January 2025.

The Collector may initiate prosecution in case there is late payment of the HAT or late submission of the quarterly HAT return.