Publish Date
Dec 20, 2024
Asia Tax Update
On 20 December 2024, the Stamp Duty Legislation (Miscellaneous Amendments) Ordinance 2024 (the Amendment Ordinance) was gazetted, waiving stamp duty payable on transfers of shares or units of real estate investment trusts (REITs) and transactions related to options market makers’ jobbing business (the sale or purchase of stock, either for hedging or in the ordinary course of business) to enhance market competitiveness and reduce costs. The Amendment Ordinance also updated the stamp duty collection arrangement for the uncertificated securities market (USM), aiming to improve efficiency and support financial market development.[1]
These measures represent a promising move by the Hong Kong government to improve investor retention and attract new investors. The stamp duty waivers came into effect on 21 December 2024. The revised collection arrangement for the USM regime will apply to transactions once the USM regime is implemented.
Previously, a stamp duty of 0.1 percent for both the buyer and seller was payable on the transfer of shares or units of REITs, which created a financial burden for investors. The Amendment Ordinance now introduces a waiver of stamp duty on the transfer of REIT shares or units. This change will enhance market competitiveness and propel the development of REITs in Hong Kong, aligning with practices in most international markets, such as Mainland China, Japan, Singapore and the United States.
Options market makers engaged in jobbing business transactions were previously required to prepare a contract note and pay a fixed stamp duty of HKD 5, with no additional ad valorem stamp duty. In contrast, market makers dealing in non-option products were exempt from stamp duty. To improve the efficiency of the options market and harmonize policies across various market makers, the Amendment Ordinance eliminates the requirement for contract notes in jobbing business transactions, thereby waiving the stamp duty.
Hong Kong currently employs a paper-based system for securities, requiring physical documents to prove and transfer ownership of shares and other securities in off-exchange transactions. However, many investors prefer to hold only the beneficial interest through the Central Clearing and Settlement System rather than the legal title.
To enhance efficiency, investor protection and transparency, the USM regime will introduce a digital (paperless) system for holding and transferring legal title to securities. For off-exchange transfers of uncertificated securities, an approved securities registrar (ASR) will handle the collection of stamp duty, pass it to the Stamp Office, and stamp the contract notes. To streamline the process, the ASR can direct investors to the Stamp Office’s e-platform for stamping and stamp duty payment. The Stamp Office will then process the e-Stamping applications and issue stamp certificates, which the transferee can download from the e-Stamping portal. Contract notes for uncertificated securities stamped using e-Stamping do not need to be physically signed or in paper form.
Our team at A&M is dedicated in providing comprehensive support to guide you through the compliance and in-depth analysis of these provisions.
Please feel free to reach out to us if you have any questions or would like to discuss any aspects of the legislation.
[1] Government of Hong Kong, “Stamp Duty Legislation (Miscellaneous Amendments) Ordinance 2024,” https://www.gld.gov.hk/egazette/english/gazette/file.php?year=2024&vol=28&no=51&extra=0&type=1&number=33
