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Hong Kong Applies ETF Stamp Duty Exemption

by Mary Swire, Tax-News.com, Hong Kong

09 February 2015


Hong Kong Exchanges and Clearing Limited (HKEx) has announced that a stamp duty waiver for the transfer of shares or units in all exchange-traded funds (ETFs) listed in Hong Kong is to take effect on February 13, 2015, following the passage of the Stamp Duty (Amendment) Bill 2014 in the Legislative Council on February 4.

The previous stamp duty waiver for ETFs did not apply if an ETF tracks an index comprised of more than 40 percent Hong Kong-listed stocks. As a result, 26 of the 124 ETFs listed in Hong Kong remained, prior to February 13, still subject to stamp duty. The non-exempt ETFs accounted for nearly a quarter of listed ETF turnover at HKEx in 2014.

Since the previous stamp duty waiver was granted in 2010, ETF listings in Hong Kong increased from 69 at the end of 2010 to 124 now. Average daily ETF turnover also increased substantially, rising to HKD4.7bn (USD606.5m) last year from HKD2.4bn in 2010. In addition, the contribution of ETFs to HKEx's securities market turnover nearly doubled from 3.5 percent in 2010 to 6.9 percent in 2014, when Hong Kong was ranked third in terms of ETF turnover in Asia and sixth globally.

"HKEx welcomes this initiative by the Government and believes it will be another very positive development for Hong Kong as well as our financial markets," said HKEx Chief Executive Charles Li. "We had record ETF turnover last year and this change will make our ETF business even stronger."

TAGS: tax | investment | business | law | equity investment | offshore | legislation | stock exchanges | stamp duty | Hong Kong | tax breaks | legislation amendments | alternative investment

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