Government has no plan to plug stamp duty loophole

Officials have no immediate plans to plug a loophole that could let buyers in the secondary market evade new measures to cool the property market.

Those purchasing a property can sidestep the new Buyer's Stamp Duty of 15 per cent, along with other duties, by using a share transfer system.

If a person purchases a second-hand flat by buying the shares of the company that owns it, the buyer is regarded as purchasing shares and not property.

But a joint housing and finance panel preparing a draft bill to be introduced retrospectively in January, yesterday dismissed the need to close the loophole.

Inland Revenue Commissioner Chu Yam-yuen said: "We have no plans to put [anti-tax avoidance] in the bill because not many transactions involve company buyers."

Company buyers accounted for 10 per cent of annual residential property transactions, and 90 per cent of the corporates were set up in the city, he added.

Kenneth Leung Kai-cheong, representing the accountancy sector, asked why the government would not amend the law. "The loophole over share transfer existed in ordinary stamp duty. Why do you carry it to the new duties?" he said.