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HK issues guidance on special stamp duty

The Hong Kong Inland Revenue Department has finally issued interpretation and practice notes concerning the special stamp duty, eight months after the levy was first introduced.

The special stamp duty (SSD) was unveiled last November in an attempt to reduce short-term speculation in the territory’s property market.

The SSD is imposed on residential property transactions of all values acquired from November 20 2010 and resold within two years.

Stamp Office Interpretation and Practice Notes No.5 clarifies that the SSD will be based on different holding periods: 15% for property held for six months or less; 10% for more than six months but less than one year; and 5% for more than one year but less than two years.

The sale and purchase of a property is also defined within the notes.

If a taxpayer is deemed to have disposed of a residential property on the date they enter into a chargeable agreement as vendor to dispose of the property. If there is no such agreement for sale, the date of a conveyance to dispose of the property is the date of the disposal.

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