The Chief Executive, Mrs Carrie Lam, announced today (November 25) in her Policy Address the introduction of amendments to the Stamp Duty Ordinance to abolish the Doubled Ad Valorem Stamp Duty (DSD) on non-residential property transactions, with effect from tomorrow (November 26) (the Effective Date). The Inland Revenue Department will revert the ad valorem stamp duty rates chargeable on non-residential property transactions to the Scale 2 rates on and after the Effective Date.
DSD was introduced in 2013 against the backdrop of an overheating property market with hectic trading activities and soaring prices. The measure was necessary to dampen the demand for non-residential properties in order to maintain stability in the property market. As a result of the economic downturn and uncertainties surrounding the COVID-19 pandemic, prices and transactions for non-residential properties have eased noticeably for a period of time, signalling a slackening of market demand. The Government considers that now is the appropriate time to abolish DSD as a demand-side management measure.
The abolition of DSD could facilitate selling of non-residential property by businesses that are encountering financial predicament or liquidity needs because of the economic downturn, mitigating the impact of the pandemic on Hong Kong’s economy and business activities.
The Stamp Duty (Amendment) Bill 2020 (the Bill) gives effect to the abolition. To allow the relevant property owners to benefit from the abolition of DSD as soon as possible, the Chief Executive has made the Public Revenue Protection (Stamp Duty) Order 2020 (the Order) by exercising her statutory powers to give full force and effect of law to the Bill so long as the Order remains in force. The Order and the Bill will be published in the Gazette today and on November 27 respectively, and introduced into LegCo on December 2.
Any instruments executed before the Effective Date remain chargeable to ad valorem stamp duty at the DSD rates.