Please enter your email address to receive a password reminder.
Log into Tax-News+
The Hong Kong Government has introduced a further stamp duty increase to cool the housing market.
The announcement is intended "to address the overheated residential property market and to guard against a further increase in the risks of a housing bubble" in Hong Kong.
The Stamp Duty Ordinance will be amended to introduce a new flat rate of 15 percent for the ad valorem stamp duty (AVD), which is chargeable on transactions for residential property signed on or after November 5, 2016.
The new flat rate replaces the existing doubled AVD rates of up to 8.5 percent and, except for specified exemptions, applies to all acquisitions of residential property by individuals or companies.
The new measure will continue to adopt the exemptions provided for under the existing AVD regime, whereby a buyer who is a Hong Kong Permanent Resident acting on his/her own behalf, and is not a beneficial owner of any other residential property in Hong Kong at the time of acquisition of a residential property, will remain subject to the original and lower AVD rates (with a maximum rate of 4.25 percent).
The Government had felt it necessary to double AVD in February 2013, in addition to the measures taken in the previous year when the Special Stamp Duty rate was increased (from 10 percent to 20 percent on properties held for less than 36 months) and a 15 percent Buyer's Stamp Duty was also introduced on purchases of residential properties.
At a press conference on November 4, Hong Kong's Chief Executive C Y Leung said that, "in view of recent market performance, we believe that this is the right time to do this. We believe that this is [an effective] cooling measure on the private housing market in Hong Kong."
Financial Secretary John C Tsang added that the measure "is targeted to help us maintain a stable and healthy development in the property market, … which has displayed increasingly high risks due to a rapid rebound in prices and turnover. We need to guard against the possibility of a property bubble. If we do not take some action, the risks are likely to get worse and could endanger macroeconomic and financial stability."
The Secretary for Transport and Housing, Anthony Cheung Bing-leung, pointed out that housing prices began to pick up from the second quarter of this year. In an increasingly active property market, prices increased by 8.9 percent in the period from March to September, mainly driven by small and medium sized residential units, and continued to rise further in October.
He confirmed that the Government would forward the relevant amendment to Hong Kong's Stamp Duty Ordinance to the Legislative Council for approval as soon as possible.
IMPORTANT NOTICE: Wolters Kluwer TAA Limited has taken reasonable care in sourcing and presenting the information contained on this site, but accepts no responsibility for any financial or other loss or damage that may result from its use. In particular, users of the site are advised to take appropriate professional advice before committing themselves to involvement in offshore jurisdictions, offshore trusts or offshore investments.
All rights reserved. © 2017 Wolters Kluwer