Hong Kong to abolish double stamp duty on commercial property in move designed to boost small firms’ cash flows

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The measure is expected to help companies receive a fair price for their assets

The stamp duty for residential property will remain unchanged

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Closed shops in Hong Kong’s Mong Kok district. Many companies that have recently decided to offload assets have been forced to sell at losses. Photo: Winson Wong

Lam Ka-sing

Published: 7:29pm, 24 Nov 2020Updated: 10:44pm, 25 Nov 2020

Corrected [10:44pm, 25 Nov, 2020]

[10:44pm, 25 Nov, 2020]
This story’s headlines have been amended to show that the double stamp duty will be scrapped, not the stamp duty per se. The name of the stamp duty introduced in February 2013 has also been amended to Doubled Ad Valorem Stamp Duty (DSD). The story has also been amended to show that the double stamp duty affected the market across the board, and not just particular segments based on prices.

The Hong Kong government is expected to abolish the double stamp duty for commercial property in a move seen as helping small and medium companies shore up their cash flows amid the city’s worst economic crisis on record.

According to sources familiar with the matter, Carrie Lam Cheng Yuet-ngor, the city’s leader, may announce the move during her policy address on Wednesday. The stamp duty for residential property, however, would remain in place, they added.

Introduced to tackle speculative practices in February 2013, the double stamp duty – officially known asDoubled Ad Valorem Stamp Duty (DSD) – is charged at different rates that depend on asset prices. It doubled or increased stamp duty rates across the board.

The city’s business community has repeatedly called for the removal, saying the punitive duty has outlived its purpose in the current market doldrums. Businesses had been hit hard by, first, last year’s anti-government protests, and, now, the coronavirus pandemic, both of which have pushed Hong Kong into its worst economic recession.

The measure is expected to help companies receive a fair price for their assets. Businesses, particularly those in re-exports, retail and travel, need money, said Jeffrey Lam Kin-fung, a member of the city’s Legislative Council. Businesses in general have found it difficult to borrow in the current economic climate. And when firms try to sell assets to shore up their cash flows, potential buyers, aware of the stamp duty, “talk down prices because they know you are probably in a rush [to sell]”, he added.

Jeffrey Lam Kin-fung, who represents the commercial constituency and The Hong Kong General Chamber of Commerce on the Legislative Council. Photo: Sam Tsang

Hong Kong to abolish double stamp duty on commercial property in move designed to boost small firms’ cash flows

The measure is expected to help companies receive a fair price for their assets The stamp duty for residential property will remain unchanged

The measure is expected to help companies receive a fair price for their assets

The stamp duty for residential property will remain unchanged