Lawmaker Paul Chan Mo-po says Hong Kong should adopt measures similar to the 'land rich' duty system used by the New South Wales state government in Australia if more investors try to avoid paying increased stamp duty on property deals.
Chan, the representative for the accountancy sector in the Legislative Council, said the small increase announced by the government last week in stamp duty on property deals worth more than HK$20 million would not be a major deterrent to wealthy investors.
'But there may be some who would try to resell property by company transfers to avoid paying stamp duty,' he said.
If this practice became more widespread, the government could clamp down on those who tried to use such a loophole by introducing Australia's 'land rich' duty, Chan suggested.
An investor in New South Wales who buys 20 per cent or more of a land-rich unit trust, or 50 per cent or more of a land-rich company, attracts duty at the general rate applied to regular land transfers rather than a lower company-based rate.
In an effort to cool down the overheated demand for luxury property in Hong Kong, the government is raising the stamp duty on transactions over HK$20 million from 3.75 per cent to 4.25 per cent to increase the investment cost to speculators. The new rate will take effect from April 1.
A tax department calculation shows that under the new measure, stamp duty on a property bought for HK$21,739,120 will increase to HK$923,913, compared with an existing duty of HK$815,217.
