The Government today (April 11) announced the tightening up of the exemption arrangement for Hong Kong permanent residents (HKPRs) under the 15 per cent New Residential Stamp Duty (NRSD) measure.

     Stamp duty has all along been charged on an instrument basis.  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 per cent and is only subject to the lower ad valorem stamp duty (AVD) rates at Scale 2 if the buyer concerned is a 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.

     The Government will amend the Stamp Duty Ordinance, to the effect that acquisition of a single residential property under a single instrument by a HKPR who is 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 will continue to be exempted from the NRSD rate of 15 per cent, and will only be subject to lower AVD rates at Scale 2.  However, if a HKPR-buyer acquires more than one residential property under a single instrument, the transaction concerned will no longer be exempted, and will be subject to the NRSD rate of 15 per cent.

     To cater for the genuine self-use needs of HKPR-buyers, a "single residential property" includes: a residential unit acquired together with a car parking space; two adjacent residential units with the partitioning walls between the units demolished to form a single unit as shown on the approved building plans; a residential unit with roof situated immediately above the unit; and a residential unit with adjacent garden. In determining whether the property concerned is a "single residential property", the Inland Revenue Department will consider individual circumstances and take into account relevant documents, including building plan, deed of mutual covenant, occupation permit, etc.

     Other exemption arrangements under the NRSD measure and the arrangement of applying doubled ad valorem stamp duty rates to non-residential property transactions remain in force.

     The tightened up exemption arrangement will take effect after midnight tonight, i.e. on April 12.  Agreements for sale and purchase signed today or before today are not affected.

Ends/Tuesday, April 11, 2017
Issued at HKT 21:27

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