CONTINUEThis site uses cookies. By continuing to browse this site you are agreeing to our use of cookies. Find out more.
  1. Front Page
  2. News By Topic
  3. Hong Kong To Retain Property Tax Measures

Hong Kong To Retain Property Tax Measures

by Mary Swire,, Hong Kong

16 May 2014

Hong Kong's Secretary for Financial Services, K C Chan, has said that the territory plans to retain tax policies to cool the local property market, but it is considering slightly relaxing conditions for non-resident buyers. He made his comments before Hong Kong's Legislative Council, which is considering legislation to increase rates of ad valorem stamp duty.

Despite the increased Special Stamp Duty (SSD) rate and the introduction in of a Buyer's Stamp Duty (BSD) on residential properties purchased by those who are not Hong Kong permanent residents (HKPRs) in 2012, Chan said the Government felt, in early 2013, that further measures were still necessary to cool down the residential property market.

Therefore, with effect from February 23, 2013, the Government increased the cost of property transactions generally by doubling across the board the rates of existing AVD applicable to both residential and non-residential properties. For transactions valued HKD2m (USD258,000) or below, the stamp duty increased from HKD100 to 1.5 percent of the consideration of the transaction.

Exemptions have been granted similar to those available in the existing SSD and BSD regimes. The new AVD rates will not apply to HKPR buyers who are not beneficial owners of any other residential property in Hong Kong at the time of acquisition of a residential property.

In addition to the need to cooling down the overheated property market immediately, Chan confirmed that the measures were also formulated to be "consistent with the Government's policy directive, i.e. to accord priority to the home ownership needs of HKPRs, and take a stringent approach in drawing up exemption rules to ensure the effectiveness of the measures."

In particular, he could not agree with subsequent proposals that a similar exemption arrangement should be available for non-residential property transactions. "The policy considerations for non-residential properties are not on a par with addressing the home ownership needs of HKPRs," he added.

As a technical adjustment, however, the Government is proposing a relaxation of the six-month timeframe for those HKPRs who have acquired a new residential property before disposing of their original one.

The current bill proposes that if the HKPR who acquires a new residential property has entered into an agreement for sale to dispose of his or her original and only other residential property in Hong Kong within six months from the date of acquiring the new property, he or she can benefit from an AVD refund mechanism. The new adjustment would now run from the conveyance on sale, instead of the agreement for sale and purchase of the newly acquired property.

Finally, Chan confirmed that the Government could not agree to include a proposed sunset clause in the legislation. Since the introduction of the doubled AVD measures, he said, the property market has shown signs of cooling down with dwindled transactions and stabilized prices. However, "as the Government has pointed out repeatedly, we cannot predict future market changes and various external factors and come up with a date as to when the demand-side management measures would no longer be applicable. Therefore, any prescribed sunset clause will only disseminate erroneous messages to the market and fuel demand, thus affecting the effectiveness of the measures," he said.

He pointed out that "the Government will continue to monitor closely the property market and changes in the external factors, take appropriate measures, including making timely adjustment to the measures with a view to safeguarding the healthy and stable development of the property market. Thus, I undertake that the Government will conduct a review and report to the Legislative Council one year after the enactment of the legislation."

A comprehensive report in our Intelligence Report series dealing with the issues raised by international property investment, and the possible taxation implications raised by such purchases, with an account of the likely (and some less obvious) potential countries for your consideration, is available in the Lowtax Library at and a description of the report can be seen at
TAGS: individuals | compliance | tax | investment | real-estate investment | tax compliance | law | real-estate | legislation | stamp duty | Hong Kong

To see today's news, click here.

Leave a comment

Read our Posting Guidelines



Password Reminder

Please enter your email address to receive a password reminder.


Tax-News Reviews

Cyprus Review

A review and forecast of Cyprus's international business, legal and investment climate.

Visit Cyprus Review »

Malta Review

A review and forecast of Malta's international business, legal and investment climate.

Visit Malta Review »

Jersey Review

A review and forecast of Jersey's international business, legal and investment climate.

Visit Jersey Review »

Budget Review

A review of the latest budget news and government financial statements from around the world.

Visit Budget Review »

Tax-News+ Updates

Receive FREE daily updates from, straight to your inbox. Register Now!

For a tailored solution, choose to receive selected news updates for your preferred jurisdictions and topics, with our enhanced Tax-News+ subscriber service. Read more...


Stay Updated

Please enter your email address to join the mailing list. View previous newsletters.

By subscribing to our newsletter service, you agree to our Terms and Conditions and Privacy Policy.

To manage your mailing list preferences, please click here »