It may be a long way from Rome, but the Italian taxman is making his unwelcome presence felt on the local bourse, where one of the country's most famous fashion houses trades.
Hong Kong Exchanges and Clearing has been urged to collect Italy's new financial transaction tax from investors in locally listed fashion brand Prada to end confusion in the market about who should collect it, according to Legco member Christopher Cheung Wah-fung.
The lawmaker, who represents brokers, yesterday met HKEx co-head of equities, fixed-income and currency for global markets Bryan Chan Ping-keung to air brokers' discontent.
"The new tax has been implemented for more than a month but neither the government nor the HKEx has issued any guideline on how the local brokers should handle the collection," Cheung said. "There is a lot of confusion and this should be cleared as soon as possible or it will hurt investors' confidence in trading any European stocks."
The Italian government's new tax, imposed from March 1, requires investors who trade Italian stocks to pay 0.22 per cent of the transaction. The tax will be reduced to 0.2 per cent next year.
Cheung said while some brokers and banks such as HSBC collected the tax from investors, some brokers do not collect it.
"The best solution to end all this confusion is for HKEx to collect the new tax and hand it to the Italian government," the lawmaker said.
The Italian tax is charged on a net basis, which means an investor who buy 1,000 shares and sells 900 shares on the same day must pay tax on only 100 shares.
"If the investors trade through two brokers, they do not know the net amount. As such, the HKEx is the only one able to get the accurate net figures to calculate the tax," Cheung said.
Quoting Chan, he said HKEx will write to the Hong Kong government to urge it to clarify the issue with Italy's government.
A government source said HKEx was studying the issue and believes the World Federation of Exchanges may need to work out how stock exchanges worldwide handle the new tax. A similar tax will be imposed in 10 other European countries next January for all company-issued shares, derivatives products and bonds.