PRESS RELEASE

(Source : Information Services Department)

LCQ8: Application for partial refund of the ad valorem stamp duty

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     Following is a question by the Hon James To and a written reply by the Secretary for Transport and Housing, Professor Anthony Cheung Bing-leung, in the Legislative Council today (May 31):

Question:

     The Stamp Duty (Amendment) (No. 2) Ordinance, which implements the doubled ad valorem stamp duty (DSD) measure and has come into operation since July 25, 2014, provides for the following arrangement for stamp duty refund: a Hong Kong permanent resident may, upon production of proof that he/she has disposed of his/her single original residential property within six months after the date of executing the conveyance on sale for acquisition of a new residential property, apply for a partial refund of the ad valorem stamp duty (AVD) within the statutory time limit (application for stamp duty refund).  On November 4 last year, the Government announced that the raising of AVD rates to a new flat rate of 15 per cent across the board, with continued adoption of the aforesaid arrangement for stamp duty refund.  It is learnt that during two periods from July 25, 2014 to November 2016 and from December 2016 to February 2017, the authorities received respectively 3 042 and 206 applications for stamp duty refund, which were made more than six months after the date of executing the agreements for sale for acquisition of the new residential properties.  In this connection, will the Government inform this Council:
 
(1) regarding the aforesaid 3 042 and 206 applications for stamp duty refund, of the respective numbers of applications submitted by the applicants (i) within the seventh or eighth month, (ii) within the ninth or tenth month, (iii) within the eleventh or twelfth month and (iv) more than 12 months, after the date of executing the agreements for sale for acquisition of the new residential properties;
 
(2) among the aforesaid 3 042 applications for stamp duty refund, of the respective numbers of applications falling under the following circumstances: the applicant executed the agreement for sale of his/her original residential property within (i) three months, (ii) the fourth or fifth month and (iii) the sixth month after the date of executing the conveyance on sale for acquisition of the new residential property;

(3) among the aforesaid 206 applications for stamp duty refund, of the respective numbers of applications falling under the following circumstances: the applicant executed the agreement for sale of his/her original residential property within (i) three months, (ii) the fourth or fifth month and (iii) the sixth month after the date of executing the conveyance on sale for acquisition of the new residential property; and
 
(4) regarding all of the applications for stamp duty refund received by the authorities in the aforesaid two periods, of the respective numbers of those applications in which the new residential property purchased by the applicant was first-hand and second-hand?

Reply:

President,

     The Government announced the New Residential Stamp Duty (NRSD) measure on November 4, 2016 to raise the ad valorem stamp duty (AVD) chargeable on residential property transactions to a flat rate of 15 per cent.  For Hong Kong permanent residents (HKPRs) who replace their only residential property, the new measure maintains the refund mechanism provided for under the doubled ad valorem stamp duty regime.  Under the refund mechanism, a HKPR who acquires a new residential property to replace his only original residential property will be subject to NRSD in the first instance, but he may apply to the Inland Revenue Department (IRD) for a partial refund of the AVD paid upon proof that his original property has been disposed of within six months from the date of executing the assignment of the new residential property.  There is a general time limit for claiming refunds, which is within two years from the date of executing the agreement for sale and purchase for acquisition of the new residential property or not later than two months after the date of executing the assignment for the disposal of the original residential property, whichever is the later.

     Based on the information from IRD, my reply to the question raised by the Hon James To is as follows:

(1) Table 1 sets out the breakdown of applications for partial refund of AVD in relation to replacement of residential properties by time of submission after executing the agreement for sale and purchase for acquisition of the new residential property.

(2) and (3) Table 2 sets out the breakdown of refund applications above by time of executing the agreement for sale and purchase for disposal of the original residential property (in relation to the executing of assignment for the new residential property).
 
     However, it should be noted that among refund applications received by IRD, buyers in some cases did not own any other residential property in Hong Kong at the time of acquisition of the new residential property.  In other words, these are not cases where a new residential property is acquired prior to disposing of the original property, and cannot be classified by the time of disposing of the original residential property.  Table 2 does not contain these cases, and hence the total number thereof is less than that of Table 1.  If stamp duty paid by the buyers under these cases is of greater value than is payable, IRD will, in accordance with relevant provisions of the Stamp Duty Ordinance, make an allowance for the overpayment of stamp duty under individual circumstances.

(4) Table 3 sets out the breakdown of applications for partial refund of AVD in relation to replacement of residential properties by whether the new residential property is first-hand or second-hand property.

Ends/Wednesday, May 31, 2017
Issued at HKT 12:00

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