• Tue
  • Oct 21, 2014
  • Updated: 7:45am

15 per cent stamp duty

To rein in the city's runaway housing prices, Hong Kong's Financial Secretary John Tsang Chun-wah announced an additional 15 per cent stamp duty on non-permanent-resident and corporate buyers starting from October 27, 2012. The move prompted speculation over the effectiveness of taxation on the real estate market and criticisms that Hong Kong was turning away from its roots as a free market economy in favour of a more protectionist market environment.

 

NewsHong Kong
HOUSING

Property cooling measures unfair to locals, Hong Kong lawmakers say

Lawmakers call on government to back down on new stamp duty rules and ask that residents to be exempt from corporate taxes

PUBLISHED : Tuesday, 17 September, 2013, 12:00am
UPDATED : Tuesday, 17 September, 2013, 7:26am
 

Housing officials are facing mounting pressure to scale back an anti-speculation measure that seeks to cool the market by taxing corporate property buyers more than private buyers.

At the Stamp Duty (Amendment) Bill 2012 committee meeting yesterday, legislators urged the government to allow companies set up by Hong Kong permanent residents to be exempted from the new buyer's stamp duty introduced last October. The rule demands overseas or corporate buyers of local properties pay 15 per cent of the price as tax on top of the existing stamp duty and a special stamp duty.

One of the most vocal critics of the measure, legislator Abraham Razack, who represents the real estate sector, said it discriminated against those who opted to hold properties through companies. "Hong Kong people should be free to choose how they own flats. It is unfair to punish those who want to own flats through companies," Razack said.

He hinted that the measure could be unconstitutional as it might breach the Basic Law stating all Hong Kong residents are equal before the law.

Razack proposed returning the tax to local corporate buyers if they did not resell the property or change ownership of the shares of the company within three years of the purchase.

It is common in Hong Kong for people to own flats through holding companies. Some speculators use shell companies to buy properties and then sell them in the second-hand market through a share transfer. The transaction would then be considered a company takeover.

Committee deputy chairman James To Kun-sun, of the Democratic Party, agreed with Razack. He said: "Unless you tax all Hong Kong people the buyer's stamp duty, overseas speculators can still ask locals to help them buy and sell flats."

At least 15 committee members declared that they owned properties, held properties through companies or helped clients handle property transactions.

Secretary for Transport and Housing Professor Anthony Cheung Bing-leung argued that any exemption that could weaken the effectiveness of the measures would not be advisable.

Lawmakers also urged the government to exempt charities from the buyer's stamp duty. They were, in general, satisfied that such groups would not take part in speculation.

Since the anti-speculation measures were announced in October last year, they have had a notable impact on transaction volumes and prices have started stabilising.

Flat prices rose about 2.7 per cent during the first two months of this year, but the rate fell to 0.4 per cent in April, a month after the government introduced a second round of anti-speculation measures.

 

Share

Related topics

For unlimited access to:

SCMP.com SCMP Tablet Edition SCMP Mobile Edition 10-year news archive
 
 

 

9

This article is now closed to comments

Camel
What a nonsense. This lawmaker should study the law more carefully before telling something stupid like this. He is just thinking about his own pocket.
I am telling you what unfair is. That housing prices went rocket high and no decent wage of the ordinary HK worker is enough for them to afford a own a flat.
And the story that foreigner can ask HKners to buy and sell for them the flats, that is really funny. Those HKner literally would legally own a property worth millions of HK Dollar. It is just like asking someone to keep a fortune in cash for them. Who wouldn't think about keeping it as legally, it is theirs. LOL.
chuchu59
Those with vested interests are trying hard to look for a weak spot. Once an exception is made another will follow and the cooling measures will be worthless. Then these greedy landlords and property agents will benefit from the boom that follows. Stick to your guns CY.
maecheung
It's a good time to see how these freely elected lawmakers are really for the ordinary Hong Kong people and support the 'cooling measures' or whether they have a vested interest and their own agenda for the rich and greedy landlords.
Hollander323
"don't get me wrong and don't get me right, I am just doing my job, the many many corporations which I have independent non-exec directorship with will stop paying my fees if I don't" said Abraham Razack. Professor Anthony Cheung Bing-leung has a difficult job at the Legco, fighting a one against many battle. "At least 15 committee members declared that they owned properties, held properties through companies or helped clients handle property transaction" what a big vested interest camp to fight against. Go Go Professor Cheung....you have done the right thing.
HK-Explorer
The property measures are working very nicely the way they are. Finally the market is stabilizing and general citizens are talking less about property. Lets wait until interest rates rise before changing the policy. right now rates are just too low and property speculators are sitting on way too much money that they will jump big time at any opening.
This is CYs best policy he implemented by far. Mainly it is the best because he did not care about the tycoons and others and just cared about the people of HK. If he caves in then it will just become another government failure.
maecheung
"Hong Kong people should be free to choose how they own flats. It is unfair to punish those who want to own flats through companies," Razack said. Abraham is right, Hong Kong is a free society, and if these greedy rich people feel they are being punished, they have the FREEDOM to choose to buy the flats under their own name instead of through companies to avoid taxes.
Giwaffe
Abraham Razack is either missing the point or disingenuous. The point of the special stamp duty measures is to discourage speculation. The very purpose of owning property through a company is either:

a) for investment, speculation, or profit making or;
b) to minimize stamp duty paid on subsequent property transfers.

Under the current system, those who own properties through shell companies already enjoy the benefit of lower stamp duties in the long run.

But Razack is right on one thing--Hong Kong people should be free to choose how they own their property, provided the cost they pay is relatively equivalent. Therefore, a system needs to be implemented to identify property transfers through shell companies in order to assess the stamp duty that ought to have been payable. This would level the playing field between people who own properties directly and people who own properties through shell companies.

In other words, the advantage to owning a property through a shell company needs to be eliminated.
whoaman
The measures are working, so the rich greedy property guys (including lawmakers...) are complaining - can't have something that CY implemented that works right in HK...
aplucky1
oh here we go again
more lies so the greedy property guys can go back to lining their pockets and creating another bubble
yes the property thieves ARE SO WORRIED ABOUT the average hong kong citizen, they must be losing sleep in their 30 thousand square foot pad on the peak
 
 
 
 
 

Login

SCMP.com Account

or