Stamp duty is a duty imposed on specified instruments or documents required by the Hong Kong government. It is important to only use duly stamped instruments or documents, otherwise any person who uses such an instrument is liable to the stamp duty and any penalty. All parties and all other persons executing the instrument are liable to stamp duty.
Types of Stamp Duty
As detailed in the Stamp Duty Ordinance (Cap. 117), the Hong Kong Special Administrative Region (“HKSAR”) mainly imposes duty on the following certain types of documents:
Of the above mentioned, the most common duty occurs when buying a property in Hong Kong. There are various implications in terms of the nature of property (residential property vs. non-residential property / commercial ), type of buyer (whether he is a Hong Kong permanent resident), the length of holding the property before selling it out (e.g. less than 12 months?).
In addition, a very common one is Hong Kong stock transfers which are subject to an analogous duty too. In this case, the agent or where no agent, the principal effecting the sale or purchase as well as the transferor and the transferee are liable to the analogous duty.
Is Duty Relief Possible?
The Hong Kong Government introduces stamp duty relief, including Intra Group Relief, Stock Borrowing Relief and Islamic Bond Scheme Relief.
Regarding the Intra Group Relief, it is available for the transfer of Hong Kong immovable property or stock from one associated body corporate to another, subject to certain conditions.
Bodies are associated if:
- One is beneficial owner of not less than 90% of the issued share capital of the other; or
- A third such body is beneficial owner of not less than 90% of the issued share capital of each.
In order to be qualified for the Intra Group Relief, it is required, amongst others that:
- The transferor and the transferee remain to be associated for at least two years;
- None of the consideration for the transfer of the asset between the associated companies is provided or received, directly or indirectly, by a non-associated party(s).
Stamp duty costs are significant under certain situations, in particular involving acquisition/transfer of immovable properties and shares of high value. In addition, late/omission of stamping will normally result into penalties. Hence, the parties involved have to be well aware of the relevant rules and obligations of the stamp duty.
The tax professionals of HKWJ are competent to provide advice and assistance regarding the stamp duty, including but not limited to
- Advising the chargeability
- Obligations and amount of stamp duty in respect of a particular transaction(s)
- Ascertaining the eligibility of stamp duty exemption/relief claim
- Applying for the intra-group relief and refund under the incoming talents scheme
- Lodging appeals against the stamp duty assessments
- Exploring the possible ways to achieve stamp duty efficiency.