Firms not exempt from stamp duty on Hong Kong homes

Local companies will not be exempted from the new higher stamp duty on homes, top government officials said yesterday, amid warnings that further measures to cool the property market could be introduced, including a capital gains tax.

Calls have mounted from the business sector to exclude local firms from the anti-speculation taxes that came into effect at midnight on Friday. But Secretary for Transport and Housing Professor Anthony Cheung Bing-leung warned that any exemption could create loopholes for non-locals to speculate on property through local companies, as the use of limited liability companies to own property was common in Hong Kong.

Some property agents reported a drop in sales over the weekend as a result of a new 15 per cent stamp duty on home purchases by non-permanent residents and companies, and an extension of the special stamp duty to three years on quick resales. The rates now range from 10 to 20 per cent.

Professor Chan Ka-keung, secretary for financial services and the Treasury, called the new measures effective but warned that other new taxes, including a capital gains tax, could be considered when needed.

"[The new] measures are stronger than a capital gains tax," he told Commercial Radio. "But I am not suggesting that we will rule out other taxes."

He later elaborated: "Whether we shall consider other taxes, like a capital gains tax … we of course will not rule out any possibility of having other taxes."

Non-affiliated legislator Lam Tai-fai, who represents the industrial sector, said the measures could help cool the market but warned they could go too far. Investors may turn to commercial property, thus jacking up prices and rents. "This is what small and medium-sized enterprises are very worried about," he said.