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(Source : Information Services Department)

LCQ14: Statutory declarations requirement for HKPRs seeking exemption from BSD


     Following is a question by the Hon Frederick Fung and a written reply by the Secretary for Transport and Housing, Professor Anthony Cheung Bing-leung, in the Legislative Council today (April 16):

Question :

    The Stamp Duty (Amendment) Ordinance 2014 (the Ordinance), enacted by this Council at the end of February this year, has introduced a Buyer's Stamp Duty (BSD) under which all companies and non-Hong Kong permanent residents acquiring residential properties are required to pay a tax of an amount equivalent to 15% of the prices of the properties. The commencement date of the Ordinance has been set retrospectively at October 27, 2012.  I have received enquiries and complaints from members of the public who had acquired residential properties after the commencement date, saying that the Inland Revenue Department (IRD) requested them, as they were recently notified by the lawyers handling the conveyancing transactions concerned, to submit before a specified deadline statutory declarations declaring that they are Hong Kong permanent residents (HKPRs), or else they have to pay BSD. Those members of the public have pointed out that as they had already provided identity documents to their lawyers for verification when acquiring the properties in question, it is a superfluous act of the authorities to request them to submit the aforesaid statutory declarations.  Also, the lawyers concerned charged them a fee of $500 or more for handling such declarations.  In this connection, will the Government inform this Council:

(1) of the reasons and justifications for IRD to request HKPRs acquiring residential properties to provide the aforesaid statutory declarations before they may be exempted from BSD; whether it has reviewed if such a practice will cause nuisance and unnecessary expenses to the persons concerned; and

(2) whether it will consider abolishing the aforesaid practice and entrusting the lawyers responsible for handling the conveyancing transactions concerned to verify the HKPR status of the property buyers; if it will not, of the reasons for that?



    To address the exuberant property market and to accord priority to the home ownership needs of Hong Kong permanent residents (HKPRs) in the midst of the tight housing supply situation, the Government announced on October 26, 2012 the introduction of the Buyer's Stamp Duty (BSD) and the enhancement to the Special Stamp Duty in respect of residential property transactions.  The Stamp Duty (Amendment) Bill 2012, which implemented the relevant measures, was passed by the Legislative Council (LegCo) on February 22, 2014.  The relevant Stamp Duty (Amendment) Ordinance 2014 (the Amendment Ordinance) was gazetted on February 28, 2014.

    The Amendment Ordinance stipulates that a chargeable agreement for sale or a conveyance on sale is not chargeable with the BSD if it is shown to the satisfaction of the Collector of Stamp Revenue that the purchaser or transferee under the instrument is "a HKPR acting on his/her own behalf" in the transaction.  This exemption condition aims to avoid the situation where a non-HKPR circumvents the BSD by purchasing a residential property through a HKPR.  This ensures that the BSD is effective in achieving its policy objective to accord priority to the home ownership needs of HKPRs.  That said, it is not possible to determine if a purchaser or a transferee is "a HKPR acting on his/her own behalf" merely by making reference to identity documents.  As the Government has explained at the meetings of the relevant Bills Committee of the LegCo, in order to effectively enforce the exemption arrangement for the relevant purchaser or transferee to claim the BSD exemption in question, the Stamp Office will require the purchaser or transferee to make a statutory declaration to declare that he/she is "a HKPR acting on his/her own behalf" in the relevant transaction.

    The above-mentioned statutory declaration has to comply with the requirements under the Oaths and Declarations Ordinance (Cap.11).  The relevant purchasers or transferees may make the declaration at the Public Enquiry Service Centres of the Home Affairs Department in different districts, at the Inland Revenue Department (IRD), or through their lawyers.

    In this regard, after the passage of the Stamp Duty (Amendment) Bill 2012 by the LegCo on February 22, 2014, the IRD has written to law firms representing the purchasers or transferees who may be subject to the BSD to inform them of the stamping arrangement and the procedures to claim exemption, including the arrangement in relation to the above-mentioned statutory declaration, with a view to ensuring a smooth implementation of the measure.  The IRD has also uploaded onto its website the "frequently asked questions" in relation to the procedures for applying for exemptions from the BSD and the making of the relevant statutory declaration, in order to facilitate members of the public to understand the arrangements.  If purchasers or transferees cannot complete the procedures to claim exemption within the specified timeframe for any special reason, they may apply in writing to the IRD for extension.  The IRD may consider exercising its discretion with reference to the actual circumstances.

Ends/Wednesday, April 16, 2014
Issued at HKT 12:59