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A residential area in Sai Wan Ho. In 2012, a buyers’ stamp duty of 15 per cent was introduced to cool Hong Kong’s heated property market. Photo: Nora Tam

‘We need an answer’: Hong Kong lawmakers slam government for waiving HK$129.7 million worth of stamp duties for Beijing’s proxies in property market

  • Mainland agencies had HK$129.7 million worth of stamp duties waived for 77 properties bought since 2012
  • Of those properties, 63 were bought by subsidiaries of a central government agency

Beijing’s liaison office and other mainland agencies in Hong Kong had HK$129.7 million (US$16.5 million) worth of stamp duties waived for the 77 local properties they snapped up over the last seven years, government figures revealed on Wednesday.

Hong Kong lawmakers criticised the government’s decision to grant exemptions to the subsidiary companies that bought 63 of the properties in the name of official mainland agencies.

The Stamp Duty Ordinance is clear: the Central People’s Government or any “incorporated public officer or any person acting in his capacity as a public officer shall not be liable for the payment of stamp duty”.

In response to a question by a lawmaker, Secretary for Financial Services and Treasury James Lau admitted the stamp duty provision was “not directly applicable” to subsidiary companies of the official agencies.

Secretary for Financial Services and the Treasury James Lau at the Asian Financial Forum in Hong Kong in January. Photo: EPA

Lau said the government would apply section 52(1) of the ordinance to remit the stamp duty to the subsidiary companies. Section 52(1) holds that “the chief executive may remit [or refund], wholly or in part, the stamp duty”, payable or paid, in respect of “any instrument chargeable with stamp duty”, without any conditions laid.

Lau said treasury officials, before remitting the stamp duties, would examine information submitted by the buyers, such as the sales agreements, declarations of trust, shareholdings and company records.

Kenneth Leung, the accountancy sector lawmaker who filed the question, said Lau’s justification for waiving the stamp duties was unconvincing.

“How do you prove whether it is the liaison office’s officials setting up a company for themselves [to invest], or if they are acting in an official capacity?” he said. “What has the government done to ascertain the agency is in control of the subsidiary?”

Kenneth Leung at the Legislative Council’s panel on economic development in 2018. Photo: Dickson Lee

Leung, of the pro-democracy camp, also said it was unclear how many of Beijing’s subsidiaries had entered Hong Kong’s property market.

The 77 properties with stamp duties waived were bought after 2012, when the buyers’ stamp duty was introduced to cool the heated property market. The 15 per cent levy was slapped on any purchase of residential property by non-local or corporate buyers. The levy was raised to 30 per cent in 2016.

Of those 77 properties, 63 were bought by one or more subsidiaries of a central government agency in Hong Kong. The rest were bought by the liaison office or the Ministry of Commerce.

“The chief executive decided to exercise discretion and waive the subsidiaries from payment — it seems to me she is giving an advantage to the liaison office,” said Andrew Wan Siu-kin, deputy chairman of the Legislative Council’s housing panel.

China liaison office increases its Hong Kong property portfolio to more than 280 flats after its latest purchase

“How do the subsidiaries make use of the profit when they resell the flats? Does it go back to Beijing or to individual party members? We need an answer.”

Investments by Beijing’s agents in Hong Kong’s property market have been a media focus in recent years.

In February, the liaison office was found to have paid, through Newman Investment, HK$247.53 million for 20 flats at the Grand Central complex, according to the Land Registry.

All five Newman directors appear to have the same name as officials at Beijing’s liaison office.

The office later insisted the properties were used as staff quarters, and denied an intention to resell them for quick profit.