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(Source : Government Information Centre)

Unit transfers under MPF schemes exempted from stamp duty


The Government proposes to amend the Stamp Duty Ordinance to exempt the stamp duty chargeable on a transfer of units when the units are issued or redeemed if a constituent fund of a mandatory provident fund (MPF) scheme is a party to the transfer.

To tie in with the commencement date of the MPF schemes, the amendments are proposed to take effect on December 1, 2000.

"The objective of the proposal is to facilitate the smooth implementation of the MPF schemes, by simplifying the procedures involved in investment transactions under such schemes, and reduce the administrative burden of both the trustees and managers," a Government spokesman said today (October 4).

"Given that more than two million employees and self-employed persons will participate in the MPF schemes, we expect that the number of transfers arising from indirect allotment of units through fund managers and redemption of units which may be executed in a year, will be huge."

"If the stamping requirements are not exempted, the extra administrative costs incurred may be passed on to the MPF scheme members, i.e. the employees and self-employed persons. The amount of retirement benefits eventually available to them may then be reduced," the spokesman explained.

The Government estimates that the revenue forgone arising from the proposal is around $2 million a year, assuming that an additional 400,000 unit transfers will be generated by the MPF schemes a year. On the other hand, this will also give rise to a notional savings of $552,000 in recurrent expenditure, being the extra staff cost, which may otherwise have to be incurred by the Stamp Duty Office of the Inland Revenue Department to cope with the additional workload.

Specifically, the Bill seeks to exempt the following types of unit transfers from the requirement to pay the fixed stamp duty of $5 per transfer, and to submit the instrument of transfer to the Collector of Stamp Revenue for endorsement to the effect that it is not chargeable with ad valorem stamp duty:

a) indirect allotment of units by the constituent funds(CFs) under the MPF schemes to the MPF scheme members through the fund managers;

b) redemption of units in Constituent Funds by MPF scheme members;

c) indirect allotment of units by the approved pooled investment funds (APIFs) to the CFs under the MPF schemes through the fund managers; and

d) redemption of units in APIFs by the CFs under the MPF schemes.

The Stamp Duty (Amendment) Bill 2000 will be gazetted tomorrow (October 5) and introduced into the Legislative Council on October 18.

End/Wednesday, October 4, 2000