The laws on stamp duty are set out in the Stamp Duty Ordinance . Stamp duty is either a fixed fee or is calculated ad valorem depending on the nature of the transaction. As far as individuals are concerned, it is payable on:

• Leases, assignments and conveyances of immovable property.
• The transfer of shares or marketable securities
• The transfer of bearer instruments (being instruments under which ownership is transferred through physical delivery).

Immovable Property Stamp Duty Rates

2 separate rates of stamp duty are payable on immovable property:

• The Conveyance of a Freehold or the Assignment of a Leasehold : The rate of stamp duty is progressive and varies from US$13 if value of the transferred interest is less than US$128,000 to a maximum rate of 3.75% where the property is valued at more than (approx) US$800,000.
• The Granting of a Short-Term Lease : The stamp duty rate is progressive and varies between .25% and 1% of the annual rental value depending on whether the lease is for less than one year or more than 3 years. Any agreement which increases the rent reserved by a chargeable stamped lease is itself chargeable to stamp duty in respect of the additional rent which it makes payable.

The following immovable property transactions are exempt from stamp duty:

• Non-Residential Property : Instruments transferring "non residential property" are exempt from stamp duty. Non-residential property is defined as property which may not by law be used at any time for residential purposes.
• Gifts to Charitable Institutions or Public Trusts : Instruments transferring immovable property by way of gift to a charitable institution or public trust are exempt from stamp duty.
• Approved conveyances on sale to diplomatic or consular bodies .
• Mortgages : Mortgages are free of stamp duty.

Immoveable Property Stamp Duty Anti-Avoidance Provisions

There are elaborate anti avoidance provisions in place aimed at deterring speculation. Thus where the beneficial owner of real estate executes an instrument in favor of a third party under which he undertakes to hold the real estate on trust for the third party duty is payable on this instrument as if a conveyance had taken place. Likewise stamp duty is payable where under an uncompleted contract of sale the vendor is deemed by law to hold on trust for the purchaser.

Stamp Duty Payable on Shares & Marketable Securities

Stamp duty of 0.1% is payable on the transfer of shares or marketable securities, unless the transfer is a voluntary disposition inter vivos in which case the rate is double.

Securities Transactions Exempted from Stamp Duty

The following transactions are exempt from stamp duty:

• Loan capital transactions, bills of exchange, promissory notes, certificates of deposit, exchange fund debt instruments and Hong Kong multilateral agency debt instruments.
• Transactions involving debentures, loan stocks, funds bonds or notes that are not denominated in Hong Kong currency except to the extent that they are redeemable in that currency.
• Stock donated to charitable bodies or public trusts which are exempt from taxation in Hong Kong.

The amount of stamp duty payable is 3% of the value of the instrument transferred.

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