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:
- Conveyance on sale also known as “Assignments”
- Agreement for sale of immovable property
- Lease of immovable property also known as “Tenancy Agreements”
- Transfer of Hong Kong stock
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), 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?
Despite all these liabilities, there is a group relief arrangement for the stamp duty in certain areas, where certain conditions have to be fulfilled for applying the relief. These areas include intra group relief, stock borrowing relief, and Islamic bond scheme relief.
We provide expert advice to our clients on how to better manage their tax and duty obligations to ensure the legality of the instruments or documents usage and avoid any additional penalties.
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