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The tightening of Hong Kong's stamp duty rules to clamp down on tax avoidance involving the acquisition of multiple properties under a single contract has been effective, Secretary for Transport and Housing Anthony Cheung says.
Effective March 12, 2017, the new rules require buyers to pay 15 percent stamp duty according to the number of new homes purchased, rather than on a single contract. Prior to the change, taxpayers had been acquiring multiple properties through one contract to minimize the amount of stamp duty liable.
Speaking to the media on the matter on April 15, Cheung said that "once this tightening up measure had been announced, the effect had been realized, because anyone who acquires multiple properties under one instrument will be subject to the 15 percent stamp duty."
"The purpose of the stamp duty is to give priority to genuine home owners who would like to acquire property for their own consumption, while investor buyers have to bear a higher transaction cost. This is one way to manage demand. We think we have achieved that purpose," he added.
Stamp duty is charged on an instrument basis in Hong Kong. Under the existing exemption arrangement, acquisition of residential property under a single instrument, irrespective of the number of residential property involved, is exempted from the Non-Resident Stamp Duty (NRSD) rate of 15 percent and is only subject to the lower ad valorem stamp duty if the buyer concerned 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.
To prevent local investors from making use of the above exemption arrangement to avoid the payment of NRSD, the Government decided to tighten up the relevant exemption arrangement.
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