Stamp Duty on Transfer of Shares of a Hong Kong Company

The transfer of shares in a Hong Kong company must be stamped. Stamp duty on contract notes are charged on the sales consideration or the fair market value., whichever is the higher. The rate of duty is 0.1% payable by each of the purchaser and seller involved in a transaction, giving an effective rate of 0.2%. Subject to the completion of the legislative process to increase the stamp duty rate, the relevant rate will be increased with effect from 1 August 2021 from 0.1% to 0.13%.

However, if the shares were transferred as voluntary disposition inter vivos or as a gift, the stamp duty to be charged is HK$5 plus 0.2% of the of the value of the stock. Subject to the completion of the legislative process to increase the stamp duty rate, the relevant rate will be increased with effect from 1 August 2021 from $5 + 0.2% to $5 + 0.26%

In evaluating the fair market value, the Stamp Duty Office will normally accept the net asset value shown by the company’s latest audited accounts. Certified management accounts of the company from the end date of the latest audited accounts made up to a date within 3 months before of transfer, if the audited accounts are not made up to a date within 6 months prior to the date of transaction. Stamp duty relief is available for the case of transfers of shares within a group of companies, where one is beneficial owner of not less than 90% of the other, or both parties are under 90% (or more) common ownership.

Capital Duty on Increase of Capital of a Hong Kong Company

The capital duty of Hong Kong company has been abolished on 1 June 2012. There is no capital duty for increase of capital for a Hong Kong company now.

Source：Hong Kong Inland Revenue Department’s website

- https://www.gov.hk/en/residents/taxes/stamp/stamp_duty_rates.htm
- https://www.ird.gov.hk/eng/pdf/pn04a.pdf
- https://www.ird.gov.hk/eng/tax/budget2021_sd.htm