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Hong Kong Company Formation: Stamp Duty
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Company Formation Hong Kong and Stamp Duty
Stamp duty is chargeable on certain documents specified in the First Schedule to the Stamp Duty Ordinance which imposes fixed duty on some documents and an ad valorem duty on others. Fixed duties vary from $3 to $100 whereas ad valorem duties range from 0.1% to 4.25%.
In the case of conveyances of immovable property, the following duties are chargeable:
- $100 where sale price does not exceed $2,000,000;
- 1.5 per cent where the sale price exceeds $2,000,000 but does not exceed $3,000,000;
- 2.25 per cent where the sale price exceeds $3,000,000 but does not exceed $4,000,000; 27
- 3 per cent where the sale price exceeds $4,000,000 but does not exceed $6,000,000;
- 3.75 per cent where the sale price exceeds $6,000,000 but does not exceed $20,000,000; or
- 4.25 per cent where the sale price exceeds $20,000,000.
There is provision for marginal relief at the commencement of the higher rates. With effect from 31 January 1992, stamp duty at the same rates as conveyances of immovable property is chargeable on agreements for the sale and the purchase of residential property. After the agreement has been so stamped, the related conveyance will be chargeable with a fixed stamp duty of $100 only.
For residential property acquired on or after 20 November 2010 and disposed within 24 months, Special Stamp Duty will be imposed on top of the ad valorem duty. The amount of Special Stamp Duty is calculated by reference to the stated consideration or the market value of the property (whichever is higher) at the following regressive rates for different holding periods by the transferor before the disposal:
- 15% if the property has been held for six months or less;
- 10% if the property has been held for more than six months but for 12 months or less; and
- 5% if the property has been held for more than 12 months but for 24 months or less.
Leases granted in consideration of premium only attract the same duties as for conveyances of land. For leases granted in consideration of both premium and rent, the premium attracts an ad valorem duty of 4.25% while the rate of duty on rents varies with the period of the lease (from 0.25% to 1% of the annual rent).
Transactions in Hong Kong Stock require the preparation of contract notes on which buyers and sellers have each to pay ad valorem duty at the rate of 0.1% of the consideration.
In all cases, the Collector of Stamp Revenue is empowered to charge duty based on the market value of the property conveyed or shares transferred if he is of the opinion that the consideration is inadequate.