With a view to suppressing the property speculation in Hong Kong, the Financial Secretary has, on 26 October 2012, announced that Government will amend the Stamp Duty Ordinance to introduce two new measures on residential flats with effect from 27 October 2012:

  • Introduce Buyer's Stamp Duty on residential flats acquired by any person (including a company wherever incorporated) except a Hong Kong Permanent Resident.
  • Adjust the rates and extend the holding period in respect of the Special Stamp Duty.

Buyer's Stamp Duty (BSD)

BSD specifically targets buyers of residential flats who are not Hong Kong Permanent Residents ("HKPR").

  • Under what circumstances BSD is chargeable? – BSD is chargeable on all sale and purchase of residential flats on or after 27 October 2012, except where a buyer is a HKPR. If the buyer is a company, BSD will be chargeable irrespective of where the company is registered or domiciled.
  • Who is a HKPR? – HKPR is generally defined as an individual holding a Hong Kong Permanent Identity Card.
  • What is the rate?15% on the stated consideration or market value (whichever is the higher) of the flats, on top of the existing ad valorem stamp duty and special stamp duty, if applicable.
  • Who has to pay? – Only the buyer/transferee is liable. This is to be contrasted with the existing stamp duty scheme where both of the buyer and seller are jointly and severally liable.
  • When is it payable? – The BSD will be payable within 30 days from the date the new legislation is enacted.
  • What if a flat is purchased in the joint names of a HKPR and a non-HKPR?Full (not half) BSD is chargeable on the entire stated consideration or market value (whichever is the higher) unless the non-HKPR is a close relative of the HKPR (currently proposed to be a spouse, parent, child, brother or sister).
  • Any exemptions? – Yes, the current proposal is that exemption will apply to the following:
    1. Acquisition/transfer by or to a HKPR (or a HKPR jointly with a non-HKPR close relative).
    2. Associated companies transfers (s.45 of Stamp Duty Ordinance).
    3. Acquisition/transfer by inheritance, winding up, bankruptcy, court order (including compulsory sale).
    4. Acquisition/transfer by or to Government, Urban Renewal Authority or mortgagee which is a financial institution.
    5. Gift to charitable institutions exempted from tax under s88 of the Inland Revenue Ordinance.
  • Exemption for redevelopment purposes? – Government says that that exemption will be given for acquisition of residential flats for redevelopment but how this will work is not yet clearly defined.

Special Stamp Duty (SSD)

Any residential flat acquired on or after 27 October 2012 and resold within 36 months will be subject to the new rates of SSD. The following table compares the new SSD rates with the previous SSD rates:

Period within which a flat is
re-sold after acquisition

New SSD Rates
(Re-sale of a flat acquired on or after 27 October 2012) 

Old SSD Rates
(Re-sale of a flat acquired between 20 November 2010 and 26 October 2012)

6 months or less



More than 6 months but less than 12 months



More than 12 months but less than 24 months 



More than 24 months but less than 36 months 



Once the new legislation is enacted, the difference in the SSD between the new and old rates will be payable within 30 days of the enactment date.


Amendments to the Stamp Duty Ordinance will need to be made to reflect the above changes. It is expected that, as with the implementation of SSD two years ago, the legislation will not be passed until after at least a number of months and it will have retrospective effect dating back to 27 October 2012.

It is also anticipated that, before the amended legislation is passed, more details will be provided by the Government to explain the actual implementation of the BSD and new rates of the SSD.

For inquiries related to this Legal Update, please contact F.K. Au or your usual contacts with our firm.