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(Source : Information Services Department)

LCQ10: Statutory declarations for seeking exemptions from Buyer's Stamp Duty


     Following is a question by the Hon Ronny Tong and a written reply by the Secretary for Transport and Housing, Professor Anthony Cheung Bing-leung, in the Legislative Council today (May 7):


    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 (non-HKPRs) acquiring residential properties are required to pay a tax of an amount equivalent to 15% of the prices of the properties, subject to certain exceptions.  The commencement date of the Ordinance has been set retrospectively at October 27, 2012.  In enforcing the Ordinance, the Inland Revenue Department (IRD) writes to the lawyers handling the conveyancing transactions concerned, requesting them to inform those qualified persons who have acquired residential properties after the commencement date that in order to be granted the exemption, such persons are required to submit statutory declarations (SDs) to declare that they are Hong Kong Permanent Residents (HKPRs)(if they apply for BSD exemption on the ground that they are HKPRs) and they are acting on their own behalf.  In this connection, will the Government inform this Council:

(1) of the number of residential property buyers who have submitted the aforesaid SDs so far;

(2) given that it is the duty of IRD to trace and investigate criminal offences such as tax evasion and tax-related frauds, of the justifications for IRD to require HKPRs to make the aforesaid SDs, and thus to bear the legal liability and the expenditure concerned;

(3) whether it has reviewed if the aforesaid requirement for submission of SDs has caused nuisance to the persons concerned and infringed on their right of silence when facing criminal prosecutions;

(4) given that non-HKPRs acting on their own behalf can be exempted from BSD under certain circumstances, of the ways adopted by IRD, other than requiring the persons concerned to submit SDs, to verify that they have acted on their own behalf; and

(5) given that the deadline for submission of SDs by buyers who acquired residential properties before the day of gazettal of the Ordinance was April 30 this year, whether those buyers who failed to submit SDs by that date will bear other consequences, in addition to their being subject to BSD; if so, of the details?



    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.  It is not possible to determine if a purchaser or a transferee is "a HKPR acting on his/her own behalf" or is acting on behalf of any other person in the transaction merely by making reference to identity documents.  As the Government has previously 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 and is not acting on behalf of any other person.  The Government has also explained that the reason for requiring the purchaser or transferee to make the statutory declaration is that the purchaser or transferee should have full cognisance of the relevant facts and circumstances surrounding the transaction and should be able to declare whether he/she is acting on his/her own behalf in the transaction, having regard to the actual situation.

    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 (HAD) in various districts or at the Inland Revenue Department (IRD).  The HAD and the IRD will not charge any fee for the service.  Purchasers or transferees may also make the declaration through their lawyers.  According to section 36 of the Crimes Ordinance (Cap. 200), any person who knowingly and wilfully makes (otherwise than on oath) a statement false in a material particular in a statutory declaration shall be guilty of an offence and shall be liable on conviction upon indictment to imprisonment for two years and to a fine.  To verify whether a purchaser or transferee is acting on his/her own behalf, the IRD may request for further evidence, such as the source of funding, to substantiate that he/she is acting on his/her own behalf.

    The requirement for the purchaser or transferee to make the declaration in question aims to prevent the BSD exemption for HKPRs from being abused, which is a legitimate purpose.  The Government does not consider that this requirement will have any impact on the right of the purchaser or the transferee to remain silent.  In fact, even if the relevant party is prosecuted for wilfully making a false declaration, the BSD regime will not affect their right to remain silent, etc in the prosecution.  We consider that the requirement for the purchaser or transferee to make the declaration in question strikes an appropriate balance between safeguarding the effectiveness of the BSD and providing convenience to the public.   

    After the passage of the Stamp Duty (Amendment) Bill 2012 by the LegCo on February 22, 2014, the IRD had 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.  As at April 25, 2014, the purchasers or transferees of around 51 000 residential properties transactions have submitted the relevant declarations to the IRD.

    Apart from the exemption for "HKPRs acting on their own behalf", under the BSD regime, purchasers or transferees who are not HKPRs may also be exempted from the BSD under specified scenarios.  They include transactions involving acquisitions or transfers between close relatives; acquisitions of residential properties for redevelopment purpose; acquisitions of replacement properties as a result of specified ordinances, etc.  The relevant purchasers or transferees have to submit to the IRD the documentary proof when they apply for the exemption (such as a birth certificate or a marriage certificate, etc), and the IRD will determine whether such cases are eligible for the exemption in accordance with the Amendment Ordinance and the actual situations.

    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 on the basis of the actual circumstances.

Ends/Wednesday, May 7, 2014
Issued at HKT 12:06