Hong Kong 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.
Foreign chambers of commerce hit out at doubling of Hong Kong stamp duty
Tax on commercial property unfairly targets firms seeking permanent homes, businesses say
Chambers of commerce that represent hundreds of foreign firms in Hong Kong are voicing unhappiness at the recent doubling of stamp duty on commercial property purchases.
The government's February 22 tax increase on property sales exceeding HK$2 million was designed to rein in speculation. But foreign firms say they have been unfairly targeted by the move, which greatly raises their business costs in the city.
The top bracket - on sales of more than HK$20 million - rose to 8.5 per cent of property value, from 4.25 per cent.
Because of the increase, Canadian insurer Manulife Financial had to pay HK$383 million instead of HK$191 million when it spent HK$4.5 billion to purchase the planned West Tower at One Bay East in Kwun Tong last month for its own use.
The Canadian Chamber of Commerce has written to the Legislative Council, urging the government to grant an exemption to long-term buyers of office space for their own use.
"[Chamber members] are purchasing the office space to try to fix their costs in an expensive city," said David Nesbitt, the chamber's executive director. "But they are unfairly punished. We have written a letter laying out our disagreement with long-term and normal purchasers [of commercial properties] being punished by the taxation, which isn't aimed at them."
Nesbitt said the chamber represented 180 companies operating in Hong Kong, from large organisations like Manulife to firms with a handful of employees.
"Some of our members are considering purchasing [commercial] property or have already done so," he said.
The Australian Chamber of Commerce said it would also be expressing its concerns that the raised duty would discourage genuine users from buying commercial properties.
The American Chamber of Commerce is drafting its views on the issue, people familiar with the matter said. The British Chamber of Commerce is also said to be concerned.
The Canadian chamber's letter was sent to the Legislative Council's Bills Committee on Stamp Duty (Amendment) Bill 2013 last week, urging the government to consider the "unintended consequences" of the doubling of stamp duty for all buyers.
The chamber suggested the government consider the example of Singapore, which included an exemption from extra duty for non-residential properties held for more than three years.
A spokeswoman for the Australian chamber said its construction and finance committees would be responding with suggestions for exemptions.
"The negative flow-on effects include limited diversification of ownership as well as fewer choices for commercial tenants," she said.
The Australian chamber is the second-largest in Hong Kong, with almost 1,400 members representing about 500 companies.
A spokesman for the American chamber, the largest chamber, refused to comment. A member of the British chamber's real estate panel did not return calls. A member of the Legco's Bills Committee said a meeting would be held today to discuss the issue.