Stamp duty should extend to commercial properties, accounting firm suggests
The government should stop charging companies stamp duty when they buy offices for their own use and instead tax only speculators who resell commercial property quickly, accountancy giant Ernst & Young said yesterday.
The firm's suggestions for this month's budget also include a 75 per cent salary-tax discount, capped at HK$10,000 per taxpayer, and expanding the income bands at which progressively higher rates of salaries tax kick in, from HK$40,000 to HK$48,000.
And Ernst predicts a government surplus of HK$40 billion for the financial year ending next month, meaning financial chief John Tsang Chun-wah's prediction of a deficit would yet again prove false.
The government doubled stamp duty on non-residential property sales a year ago this month, taking the rate to between 1.5 and 8.5 per cent of the price as part of a package of measures to cool the property market. But commercial property is not covered by a special stamp duty of between 10 and 20 per cent levied on homebuyers who sell within three years.
"When a multinational insurance company bought an office in Kowloon recently and paid HK$4.5 billion, the stamp duty alone came to [a reported] HK$400 million," said Tracy Ho Suk-fan, a tax partner at Ernst. "It was also said that Hong Kong's competitiveness was reduced because the [stamp duty] caused a big increase in operating costs."
Ho suggested that speculation could be discouraged by imposing a special stamp duty on the resale of offices.
Ernst tripled its estimated budget surplus from the HK$12 billion it predicted in November, citing a HK$13 billion increase in government land-sale revenue.