HONG KONG SAR, CHINA Law and Practice Contributed by: Jeffrey Lee, Jessica Leung and Hilary Leung, Charles Russell Speechlys
• broadening the definitions of fund and special purpose entities; • enlarging the coverage of qualifying investments; and • relaxing conditions for profits tax exemptions and anti-round tripping rules. Property Tax The assessable value of any land or buildings situated in Hong Kong (with limited exceptions) is calculated by reference to the actual consideration payable to the owner in respect of the right of use of the property, such as gross rent received or receivable and pay - ment for the right of use of premises under licence. The net assessable value is the assessable value (after the deduction of rates paid by the owner and certain other payments) minus a 20% statutory allowance for repairs and outgoings. Property tax is charged to the owner at the standard rate of 15% on the net assess - able value of such land or buildings. A corporation letting property in Hong Kong is regarded as carrying on business in Hong Kong and should be subject to profits tax in respect of its prop - erty income. However, if certain conditions apply, the amount of property tax chargeable can be set off against the amount of profits tax payable, and any excess property tax paid will be refunded. Alternative - ly, corporations can apply for exemption from paying property tax that would otherwise be set off against their profits tax liabilities. Stamp Duty Stamp duty is chargeable on certain documents spec - ified in the First Schedule to the Stamp Duty Ordi - nance. These documents largely relate to transactions of Hong Kong stock and immovable properties. For the contract notes for the sale and purchase of Hong Kong stock, ad valorem stamp duty is charge - able at the rate of 0.1% of the consideration (or the market value if it is higher) of both the buyer and the seller. For transfers of immovable property in Hong Kong, ad valorem stamp duty at either Scale 1 rates or Scale 2 rates (maximum of 4.25%, or maximum of 8.5% for certain instruments executed before 26 November
2020) is chargeable based on the higher of the sale price and the market value of the property. Exemptions Certain exemptions and reliefs are available. For example, the transfer of Hong Kong immovable prop - erty or stock between associated companies can be exempted from stamp duty if the companies remain associated for at least two years after the transfer. The transfer of shares under stock borrowing and lend - ing transactions may be exempted from stamp duty. Property inherited from a deceased person’s estate under a will or the law of intestacy, or right of sur - vivorship by a beneficiary, is exempted from stamp duty. The Stamp Duty Legislation (Miscellaneous Amendments) Ordinance came into operation on 21 December 2024, in which the stamp duty payable for the transfer of real estate investment trust shares or units and jobbing business of options market makers is waived. Others There is no capital gains tax, gift tax, sales tax or VAT in Hong Kong. No estate duty is payable in respect of estates of persons who passed away on or after 11 February 2006. Dividends paid from a company that is chargeable to Hong Kong tax are not taxable in the hands of its shareholders. 1.2 Exemptions No estate duty is payable in respect of the estates of persons who passed away on or after 11 February 2006. Certain exemptions, including but not limited to foreign assets, donations paid to recognised chari - ties and mandatory provident funds, are available for estates of persons who died on or before 11 February 2006. No stamp duty is payable on the transfer of shares or properties from a deceased person’s estate to a beneficiary under a will, the rules of intestacy or the right of survivorship. 1.3 Income Tax Planning Businesses and individuals in Hong Kong are charged profits tax, salaries tax and property tax (see 1.1 Tax
226 CHAMBERS.COM
Powered by FlippingBook