Hong Kong Taxation

Hong Kong
Stamp Duty
Taxation

Introduction

by Edith Chan
 4/11/2022

Taxation
Stamp Duty
By Edith Chan

By Edith Chan 1

Stamp Duty
Stamp duty is a duty imposed on instruments (i.e. documents) by the
Stamp Duty Ordinance (Chapter 117) of the Laws of Hong Kong.

Head 1 – Immovable Property In Hong Kong

“Immovable property” means any land (whether covered by water or not),

any estate, right, interest or easement in or over land, and things attached to
land or permanently fastened to anything attached to land.

Under this head, there are 2 sub-heads, namely head 1(1) – Conveyance on
Sale and head 1(2) – Lease.

By Edith Chan 2

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Head 1(1) - Conveyance on Sale

Steps for purchase and sale of immovable property in HK

 Sign provisional sale & purchase agreement
 Sign a formal sale and purchase agreement
 Sign an assignment
(an assignment or a conveyance is necessary to
transfer the legal title in the property from the legal
owner to the purchaser)

The final assignment is chargeable for $100.

By Edith Chan 3

Ad valorem stamp duty (AVD)

Scale 1- Part 1 (15%) Scale 1 – Part 2 (table) Scale 2 (table)

Residential property On/after 5/11/2016 On/after 23/2/2013 but HKPR and not own
before 5/11/2016 any residential
property in HK at
(cannot satisfy (cannot satisfy HKPR
and not own any the time of
HKPR and not own acquisition
any residential residential property in
property in HK) HK)

Non-residential N/A On/after 23/2/2013 On/after26/11/2020

property

By Edith Chan 4

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Buyer stamp duty(BSD)

- Flat rate 15%

- From 27/10/2012
- On residential property only
- HKPR -------- Exempt

By Edith Chan 5

Special stamp duty – residential property only

Holding period Acquired on/after Acquired on/after

20/11/2010 and 27/10/2012
before 27/10/2012

6 months or less 15% 20%

More than 6 months but not

more than 12 months 10% 15%

More than 12 months but not 5% 10%

more than 24 months

More than 24 months but not - 10%

more than 36 months

By Edith Chan 6

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Stamp duty calculation

AVD/BSD/SSD =

Higher of consideration or market value of the property at

the time of acquisition X Rate

By Edith Chan 7

Voluntary Disposition (S. 27)

Under S. 27(1), any conveyance of immovable property operating as a
voluntary disposition inter vivos (i.e. a life-time gift) shall be chargeable
with stamp duty as a conveyance on sale on the market value of the
property conveyed.
Also, under S. 27(4), where the consideration for a conveyance or
transfer is in the opinion of the Collector inadequate such that a
substantial benefit is conferred on the assignee or transferee, that
conveyance or transfer is deemed to be a gift. Hence, it is chargeable
on the full market value of the property or stock transferred. In invoking
S. 27(4), the Collector has to adjudicate the instrument under S. 13

Marriage is the consideration - S.27(4) not apply - exempt

By Edith Chan 8

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Transfer between close relatives

AVD
irrespective of whether or not they are HKPRs or
beneficial owners of any other residential property in
Hong Kong on the date of sale or transfer

BSD-
SSD-

By Edith Chan 9

Lease
Head 1(2) (a) – (i) Lease Premium only

The word premium covers release of a debt, lump sum payment on a

contingency, allotment of shares, etc. Usually, advance payment of
more than one year’s rent is treated as premium

The duty chargeable under head 1(2)(a) is the same as on a

conveyance on sale, Head1(1) would apply. It follows that low value
relief is available in such case

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Lease
Head 1 (2)(b) – (ii) Rent
Duty is calculated by reference to yearly or average yearly rent as
follows:-
(a) Where the term is not defined 25 cents for every $100 or part
or is uncertain thereof of the yearly or average
yearly rent

(b) Where the term specified in 25 cents for every $100 or part
the lease does not exceed thereof of the total rent payable over
one year the term of the lease

(c) Where the term specified in
the lease exceeds one year
but does not exceed three
years
(d) Where the term specified in
the lease exceeds three
years
50 cents for every $100 or part
thereof of the yearly or average
yearly rent
$1.00 for every $100 or part thereof
of the yearly or average yearly rent

By Edith Chan 11

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Lease
(iii) Premium and rent

If the consideration is in the form of both premium and rent, stamp

duty will be the sum of a) Premium x max. rate (lower rate is not
applicable and; b) Rent – depends on the length of the lease period
as computed above.

Head 1(2)(c) - stipulates that a lease executed in pursuance of a duly

stamped agreement for lease only attracts a fixed duty of $3.

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Head 2 - Hong Kong Stock

Contract Note - Bought note and sold note
• Head 2(1) at the rate of $1.30 for every $1,000 (0.13%)
on the amount of the consideration or its value at the date
which the contract note falls to be executed.

Instrument of Transfer
• Such transfer will attract a fixed duty of $5.

By Edith Chan 13

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Late Stamping
Any instrument chargeable with stamp duty which is not stamped before
or within the time for stamping shall not be stamped except by the
Collector upon payment of the stamp duty and a penalty of whichever of
the following amount applies:-

1) If delay not later than a month 2 times the amount of duty

2) If delay later than 1 month but not 4 times the amount of duty
later than 2 months

3) In any other case 10 times the amount of duty

The Collector may remit the whole or any part of penalty payable.

By Edith Chan 14

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Appeal Against Assessment

Section 14
Any person who is dissatisfied with the assessment of the
Collector under Section 13 may, within a period of 1 month
from the date on which the assessment is made and on
payment of the stamp duty in conformity therewith, appeal
against the assessment to the Court. The Court will then
determine the correctness of the assessment.

By Edith Chan 15

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END
Q&A
By Edith Chan 16

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Stamp duty rates

Stock 0.13% x 2 =0.26% 0·2% + $5

Immovable property

Conveyance on sale and agreement for sale (ignoring marginal reliefs)

Scale 1 Scale 1 Scale 2
(Part 1) (Part 2)
Up to $2,000,000 15% 1·5% $100
$2,000,001 to $3,000,000 15% 3·0% 1·50%
$3,000,001 to $4,000,000 15% 4·5% 2·25%
$4,000,001 to $6,000,000 15% 6·0% 3·00%
$6,000,001 to $20,000,000 15% 7·5% 3·75%
$20,000,000 and above 15% 8·5% 4·25%

Conveyance on sale and agreement for sale - special stamp duty

Holding period
Not exceeding six months 15% or 20% as applicable
Between six and 12 months 10% or 15% as applicable
Between 12 and 24/36 months 5% or 10% as applicable

Conveyance on sale and agreement for sale buyer’s stamp duty 15%

Lease
(a) Key money, construction fee etc only
(b) Key money, construction fee etc and rent
Key money, construction fee etc
Rent
As for conveyances at Scale 2
(above)
4·25% of the consideration
As for rent-only lease (below)

(c) Rent only (as a percentage of the average yearly rent)

Undefined term 0·25%
Not exceeding one year 0·25%
More than one year but
not exceeding three years 0·50%
Exceeding three years 1·00%