Stamp Duty Exemption on Delivery of Hong Kong Stocks as Consideration for the Allotment or Redemption of a Share or Unit of an Authorized Open-ended Collective Investment Scheme

On 7 January 2019, the Inland Revenue Department released a Stamping Circular which is about Stamp Duty Exemption on Delivery of Hong Kong Stocks as Consideration for the Allotment or Redemption of a Share or Unit of an Authorized Open-ended Collective Investment Scheme.

Effective from 30 July 2018 (“Relevant Date”), the Securities and Futures (Amendment) Ordinance 2016 (“the Amendment Ordinance”) amended the Stamp Duty Ordinance (Cap. 117) (“SDO”). Stamp duty for the sale and purchase of Hong Kong stocks in consideration of the allotment or redemption of shares or units of an authorized open-ended collective investment scheme is exempted.

Authorized open-ended collective investment scheme (“the Scheme”) means an open-ended collective investment scheme authorized under section 104 of the Securities and Futures Ordinance (Cap. 571)

Open-ended collective investment scheme, which in turn means a collective investment scheme the shares or units of which may be repurchased or redeemed at the request of any of its shareholders or unit holders—

(a)    at a price calculated wholly or mainly by reference to the net asset value of the scheme; and

(b)    in accordance with the frequency for repurchase or redemption, requirements and procedures set out in the offering document or constitutive documents of the scheme.

On or after the Relevant Date, given that the value of the Hong Kong stock is proportionate to the value of the share or unit, the stamp duty is exempted for making and execution of a contract note for the allotment or redemption of a share or unit of the Scheme. Also, the instrument of transfer effected for such purpose is not required to be stamped or endorsed under the SDO.

If the value of the Hong Kong stock sold or purchased is equivalent to the asset value of the Scheme which the allotted or redeemed share or unit represents as at the date of allotment and redemption, the allotment or redemption is considered to be proportionate.

Source:

http://www.ird.gov.hk/eng/new/

(News Archives from HKIRD)

https://www.elegislation.gov.hk/

(Hong Kong e-legislation)