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Hong Kong Special Stamp Duty: Issues and Alternatives

On 20 November 2010, the Government of the Hong Kong Special Administrative Region introduced a Special Stamp Duty (SSD) on residential property acquired and resold within 24 months. In June 2011, the Legislative Council passed the relevant amendment to the Stamp Duty Ordinance. This article first examines the reasons for and the mechanism of the SSD. It then looks at a number of issues, namely constitutional challenges, determination of holding periods, certainty and proportionality, use of shell companies, and transfers of payment arising from introduction of the SSD. Finally, it proposes that in addition to the SSD, the Government could make use of existing antiavoidance measures to combat ever-rising property prices.