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All-In, Easy Guide to Hong Kong Stamp Duty
As the owner of a small business or an entrepreneur-to-be, there may be many instances where you will required to produce documents and have them stamped.
For example, issuing new shares. In this case here are two main ways of doing this: by issuing new shares or by transferring shares by way of a sale or gift. For the latter (i.e. whenever shares are transferred by an existing shareholder to any third party), stamp duty must be paid on those shares. While these are relatively simple procedures, it is important to understand the basic requirements of how to carry them out to ensure compliance with the relevant regulations governing the issue and transfer of shares in your jurisdiction.
What is stamp duty?
Stamp duty is a tax that is levied on documents relating to the sale, transfer and lease of properties, such as immovable properties, stocks and shares. Individuals that pay the tax receive a stamp on their documents. The exact documents that attract stamp duty varies from jurisdiction to jurisdiction.
What kind of documents and persons are liable for stamping in Hong Kong?
According to the Stamp Duty Ordinance (Cap. 117) of Hong Kong, the following types of documents are subject to stamp duty:
| Nature of document | Persons liable |
|---|---|
| Conveyance on sale | All parties and all other persons executing. |
| Agreement for sale and purchase | All parties and all other persons executing. |
| Lease | All parties and all other persons executing. |
| Transfer of Hong Kong stock:
|
|
Source: GovHK Should a chargeable instrument not be duly stamped, any person who uses such instrument is liable to the stamp duty and any penalty.
How much is stamp duty in Hong Kong?
The Hong Kong stamp duty rates and their method of calculation vary, depending on the type of transaction, the nature of the document, and the date on which the document is executed.
Transfer of Hong Kong stock
For Hong Kong stock, Hong Kong stock stamp duty is calculated as follows:
| Nature of document | Rate (with effect from 1 September 2001) |
|---|---|
| Contract Note for sale or purchase of Hong Kong stock | 0.1% of the amount of the consideration or of its value on every sold note and every bought note. |
| Transfer operating as a voluntary disposition inter vivos | HKD 5 + 0.2% of the value of the stock to be transferred. |
| Transfer of any other kind | HKD 5. |
Lease
For lease of immovable property in Hong Kong, stamp duty is calculated at rates which vary with the term of the lease as follows:
| Term | Rate |
|---|---|
| Not defined or is uncertain | 0.25% of the yearly or average yearly rent (Note 1a). |
| Does not exceed 1 year | 0.25% of the total rent payable over the term of the lease (Note 1a). |
| Exceeds 1 year but does not exceed 3 years | 0.5% of the yearly or average yearly rent (Note 1a). |
| Exceeds 3 years | 1% of the yearly or average yearly rent (Note 1a). |
| Key money, construction fee etc. mentioned in the lease | 4.25% of the consideration if rent is also payable under the lease. Otherwise, same duty as for a sale of immovable property. |
Learn more about the key terms to look out for in a Commercial Lease
Sale or transfer of immovable property
With effect from 23 February 2013, stamp duty on sale or transfer or immovable property in Hong Kong is chargeable with ad valorem stamp duty (AVD) at Scale 1 rates, as follows:
| Amount of value of the consideration | Rate | |
|---|---|---|
| Exceeds | Does not exceed | |
| HKD 2,000,000 | 1.5% | |
| HKD 2,000,000 | HKD 2,176,470 | HKD 30,000 + 20% of excess over HKD 2,000,000 |
| HKD 2,176,470 | HKD 3,000,000 | 3% |
| HKD 3,000,000 | HKD 3,290,330 | HKD 90,000 + 20% of excess over HKD 3,000,000 |
| HKD 3,290,330 | HKD 4,000,000 | 4.5% |
| HKD 4,000,000 | HKD 4,428,580 | HKD 180,000 + 20% of excess over HKD 4,000,000 |
| HKD 4,428,580 | HKD 6,000,000 | 6% |
| HKD 6,000,000 | HKD 6,720,000 | HKD 360,000 + 20% of excess over HKD 6,000,000 |
| HKD 6,720,000 | HKD 20,000,000 | 7.5% |
| HKD 20,000,000 | HKD 21,739,130 | HKD 1,500,000 + 20% of excess over HKD 20,000,000 |
| HKD HKD 21,739,130 | 8.5% |
AVD is payable at Scale 1 for agreements for the sale for the acquisition of any residential property or non-residential property, if the agreement is executed on or after 23 February 2013, unless specifically exempted or otherwise provided. Access the Stamp Duty Rates Table
How can I get a document stamped?
There are several ways to get a document stamped:
- Conventional Stamping;
- e-Stamping; and
- Paper application of property documents.
Conventional Stamping
Under the conventional stamping procedure, you have to present the original instrument with a stamping request and supporting documents at the Stamp Office Counter, apart from Tenancy Agreements which can be sent by post. This mode of stamping is applicable for all types of instruments including property documents and those relating to stock transactions. The Stamp Office will either issue a stamp certificate in respect of the instrument or impress a stamp on the document upon receiving the stamping request with the required document(s) and payment.
e-Stamping
The e-Stamping system is an alternative mode of stamping to manual stamping. Instead of conventional stamps, it generates stamp certificates that are issued instantly upon receipt of stamp duty through online mode or within 2 working days after receipt of stamp duty through offline mode. It can be used for instruments related to property transactions, namely agreement for sale, assignment and tenancy agreement. Learn more about e-Stamping
Paper application of property documents
For agreements and assignments, as well as Tenancy Agreements, you may submit an application for stamping without presenting the original instrument in paper form at the Stamp office. Access more resources on the methods of stamping
What happens when I stamp my documents late or omit to stamp my documents?
There is a time limit by which you have to stamp your documents, and this varies depending on the type of document.
| Nature of document | Time limit |
|---|---|
| Conveyance on sale (including deed of gift) | Within 30 days after the date of execution. |
| Agreement for sale of residential property | Within 30 days after the relevant date (which means the date of the agreement, or, the date of the earliest agreement made by the same parties on the same terms if the agreement to be stamped is preceded by one or more such agreements), except otherwise provided in the Ordinance. |
| Agreement for sale of residential property (Deferred Payment Cases) |
|
| Lease | Within 30 days after the date of execution. |
| Contract note for purchase or sale of Hong Kong stock | Within two days after the sale or purchase, if effected in Hong Kong; within 30 days after the sale or purchase, if effected elsewhere. |
| Instrument of Transfer of Hong Kong stock (not including gift) | Before the date of execution, if executed in Hong Kong; within 30 days after the date of execution, if executed outside Hong Kong. |
| Gift of Hong Kong stock. | Within seven days after the date of execution, if executed in Hong Kong; within 30 days after the date of execution, if executed outside Hong Kong. |
Source: GovHK Should you fail to stamp your document before or within the time for stamping, your document may be stamped by the Collector, with a penalty, upon payment of the stamp duty.
| Length of Delay | Penalty |
|---|---|
| Not exceeding one month | Double the amount of stamp duty. |
| Exceeding one month but not exceeding two months | Four times the amount of stamp duty. |
| In any other case | 10 times the amount of stamp duty. |
Source: GovHK
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