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Hong Kong has legislated to clamp down on stamp duty tax avoidance where multiple properties are purchased under a single contract.
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 NRSD rate of 15 percent and is only subject to the lower ad valorem stamp duty (AVD) rates at Scale 2 if the buyer concerned is a Hong Kong Permanent Resident (HKPR) 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.
There has been public concern over the recent increase in transactions involving acquisition of multiple residential properties under a single instrument. 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.
Effective March 12, 2017, the change requires buyers to pay 15 percent stamp duty according to the number of new homes purchased, rather than on a single contract. Taxpayers had been acquiring multiple properties through one contract to minimize the amount of stamp duty payable.
Chief Executive CY Leung said: "We have been taking measures to suppress three types of demand: speculative; external, meaning demand from buyers outside of Hong Kong; and also investment demand."
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