Comprehensive Hong Kong Stamp Duty Guide

Comprehensive Hong Kong Stamp Duty Guide

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Taxation

In HK stamp duty is payable on some documents involved in the buying or selling of property or in leasing property or in Hong Kong stocks buying or selling.

A stamp duty cost can be a significant sum especially when high priced properties or stocks are part of the transaction.

It is critical to be informed about the relevant rules and obligations associated with stamp duty to ensure that you do not face the consequences of late or missed stamping.

HK stamp duty And Tiers

As outlined in the Stamp Duty Ordinance (Cap. 117), stamp duty is primarily levied on the following categories of documents:

  • Transfer or sale of immovable property situated in Hong Kong
  • Lease agreements for immovable property (commonly referred to as “Tenancy Agreements”)
  • Sale or transfer of stock in Hong Kong
  • Conveyance on sale, also known as “Assignments”

Let’s dive deeper into the types of HK stamp duty that are in force in Hong Kong.

Sale or transfer of real estate located in Hong Kong

HK stamp duty is applicable for both residential property and commercial property under Ad Valorem Stamp Duty (AVD) and in some cases Buyer’s Stamp Duty (BSD) and/or Special Stamp Duty (SSD).

What is Ad Valorem Stamp Duty (AVD)?

AVD (Ad Valorem Stamp Duty) is assessed based on either the sale/transfer consideration or the value of the property, whichever is greater. Presently, the applicable rates are as follows:

Ad Valorem Stamp Duty (AVD)

The following are subject to the rate unless otherwise stated or exempt: 

  1. Documents effected on or later than 25 October 2023 for purchase or transfer of property residential unless the conditions for a reduced rate are met (Scale 2 Rate). This makes the interest rate on housing loans in Hong Kong a little higher just to deal with the unpredictable mortgages in Hong Kong.
  1. Transactions are done on or after 23 February 2013 and before 5 November 2016 for the acquisition or transfer of residential property, unless the conditions for a lower rate (i.e. Scale 2) exist. Instruments executed after 23 February 2013 but before 26 November 2020 for acquisition of non-residential property and transfer of non-residential property. Higher rates are charged for such purpose of preventing the speculation on properties in Hong Kong.
  1. Instruments involving the purchase or transfer of a residential property provided that the buyer or transferee is a permanent resident of Hong Kong acting in their capacity and that, at the time of acquisition of the subject property, they did not possess any other residential property. Contracts for the purchase or transfer of non-residential property that are completed on or after November 26, 2020. For this AVD, the seller, the buyer, and anybody else using the instrument will all be held accountable jointly and severally.

What is Buyer’s Stamp Duty (BSD)?

BSD is in compulsory agreement on the form for the acquisition of residential property executed through agreements of sale or lease.

Yet, BSD is not appropriate for Hong Kong permanent residents who purchase real estate property for their use or hire (in this scenario, the person is the legal and beneficial owner) or if a specific social exemption applies.

The calculation of BSD will be at 7.5% (for deals executed on or after 25 October 2023) or at 15% (for deals executed on or after 27 October 2013 but before 25 October 2023) of either the stated consideration or the market value whichever is higher, and it is payable on top of the AVD.

The main objective of the BSD is to lower overheated transactions in the Hong Kong property market which is a residential market.

What is Special Stamp Duty (SSD)?

SSD is payable if all three of the following criteria are satisfied, barring the fulfillment of specific exemption conditions:

  • The deal concerned the acquisition or issuance and the transfer of a residential property.
  • The property transfer is performed by the owner or transferor within the period allowed (see the table below).

For residential properties purchased on or after October 27, 2012, and sold on or before October 25, 2023, the SSD rate is as follows:

Holding periodSSD rate
< 6 months20%
More than 6 months but for 12 months or less15%
More than 12 months but for 24 months or less10%

BSD and SSD are assessed based on the consideration declared or market value, whichever is the higher.

The seller and buyer for the transaction at the property and anyone who uses the instrument are jointly and severally liable for paying the SSD.

The establishment of the SSD is against House prices being maneuvered.

Refund of Hong Kong stamp tax and suspension for qualified incoming talent

If certain requirements are met, an entering talent may be eligible for a tax refund or a suspension of the additional HK stamp duty paid when purchasing residential property in Hong Kong. These are the conditions for retaining skilled individuals for long-term development in Hong Kong.

(A) Refund of HK stamp duty (for residential property purchases made on or before October 19, 2022, and before October 25, 2023):

  • The applicant is a new talent
  • As of the time of the purchase of the concerned property, the applicant will hold a valid visa according to talented admission schemes and does not own other residential property in Hong Kong city (except he/she purchases the property concerned to replace his/her table property in Hong Kong city, i.e., to buy a new one and then sell the original one, within 12 months from the date of sale of the property concerned);
  • The applicant has now become a Hong Kong Permanent Resident (after living in Hong Kong for more than seven years consecutively).
  • When the owner of the property applies for the HK stamp duty refund, he/she is still the owner of the mentioned property.
  • He/she can seek a refund for only one residential property.

The refunded stamp duty is BSD for 15% and AVD for Scale 1. However, note that the incoming talents with Scale 2 benefits still need to pay the AVD according to the Scale 2 rates.

(B) The suspension of HK stamp duty ( applicable to residential property purchases made on or after October 25, 2023)

Stamp duty suspension is the enhance version of HK stamp duty refund which is already existing in place for the incoming talents. The suspension mechanism allows an eligible incoming talent who bought a residential property on or after October 25, 2023, to apply for suspension of HK stamp duty payment in respect of the BSD and the AVD at the Scale 1 Rates. The talent will still be paid the AVD at Scale 2 rate.

With the Inland Revenue Department’s consent to the application for a suspension, the charge will be automatically established in favour of the Collector by operation of law. Following the process when the newly-arrived skill converts to Hong Kong permanent resident, such person can produce a waiver application to the IRD for the remission of the related HK stamp duty. After the IRD granted the relevant application, the IRD will in turn issue a certificate of discharge which has the effect of discharging the charge in favour of the Collector.

Stock sale/transfer of Hong Kong

HK stamp duty is often applied to the sale or transfer of Hong Kong shares, and the current rates are as follows: 

Stock sale/transfer of Hong Kong

HK stamp duty exemption

The Hong Kong authorities offer HK stamp duty relief (including options of Intra Group Relief, Stock Borrowing Relief, and Islamic Bond Scheme Relief).

The Intra Group Relief case requires the transfer of Hong Kong immovable property or shareholding from one associated body corporate to another that meets such conditions.

Bodies are connected if:

  • There is a beneficial holding of no less than 90% of the issued shares of the other by one; or
  • The third body is a substantial owner holding not less than 90% of the share capital of each.

To be eligible for the Intra Group Relief, one must:

  • Generally, both the transferor and the recipient are liable for a minimum of two years.
  • No transfer of the asset between the associated companies is accounted for, neither directly nor indirectly, with a non-associated party(ies).

How can Fastlane help you?

Even if you have access to all the information on the share transfer procedure right here, you might not be aware of some mistakes that can affect your business’s success. FastLane can help you make things simple when transferring shares and handling HK stamp duty. 

Fastlane also offers additional corporate services like a company secretary, accounting, and audit. With the depth of knowledge of our team, we can help your company meet all compliance requirements and guarantee that the procedure is efficient, timely, and complete with all necessary documentation. Get in touch with us right now to find out more about how we can support your success! 

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