• Wed
  • Jul 30, 2014
  • Updated: 12:51am
Business
PROPERTY

Stamp duty increase provokes protests

PUBLISHED : Thursday, 13 June, 2013, 12:00am
UPDATED : Thursday, 13 June, 2013, 5:03am

More organisations and individuals have joined the chorus of criticism against the doubling of stamp duty on the purchase of commercial properties, ahead of a meeting with lawmakers today.

It could become prohibitively expensive for businesses to buy their own premises to avoid high rental costs, the Royal Institution of Chartered Surveyors said.

"The proposed double stamp duty might send a negative signal to the international business community and therefore potentially adversely affect Hong Kong's competitiveness," the group said, after consulting its members, investors, academics and multinational corporations.

KPMG said the proposed Stamp Duty (Amendment) Bill did not allow relief for genuine long-term investors in the non-residential property market.

"This runs counter to the government's professed aim of targeting speculators, and we are strongly of the opinion that long-term investors in the non-residential property market should not be so penalised," KPMG said.

If the bill is passed, double the existing stamp duty on property sales exceeding HK$2 million will be charged on transactions starting from February 23, the day after the anti-speculation measure was announced.

Corporate governance activist David Webb said many properties, particularly whole buildings and larger premises, were held by single-asset holding firms, so they were effectively exempt from stamp duty anyway.

Now, if shares of the property holding firm are registered in Hong Kong, they are subject to 0.2 per cent stamp duty on net asset value. However, if the Hong Kong holding firm is owned by an offshore company, then the would-be buyer of the property can acquire the offshore firm without paying stamp duty.

"So the biggest impact of the new measures will be on small and medium-sized enterprises that just want to buy or sell an office unit, shop or industrial unit for self-occupancy," Webb said.

Stewart Leung Chi-kin, the chairman of the Real Estate Developers Association, called for the government to retract the measure for non-residential properties.

Last month, several chambers of commerce wrote to the Legislative Council urging the government to grant an exemption to long-term buyers of office space for their own use.

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