Global Daily Tax News, Hong Kong To Cut Real Property Taxes, (Oct 27, 2023)

Authorities in Hong Kong announced changes to the territory's property tax regime and enhanced personal tax deductions, in the 2023 Policy Address.

The territory has announced it will reduce the rate of Buyer's Stamp Duty (BSD) from 15 percent to 7.5 percent and also halve the ad valorem stamp duty rate of Part 1 of Scale 1 (on residential property) also to 7.5 percent.

Further, Hong Kong will shorten the resale period during which the Special Stamp Duty, of 10 percent, can be charged to two years, from three years.

Finally, the territory has confirmed plans to introduce a stamp duty suspension mechanism for high-skilled foreigners purchasing residential property in Hong Kong - an enhancement of the stamp duty refund arrangement introduced last year.

Under the suspension mechanism, an eligible incoming talent who purchases a residential property in Hong Kong on or after October 25, 2023, may apply for suspension of stamp duty payment in respect of the BSD and the New Residential Stamp Duty (NRSD). The taxpayer must still pay the ad valorem stamp duty at Scale 2 rates. However, after the taxpayer becomes a Hong Kong permanent resident (HKPR), the taxpayer may submit an application for waiver to the IRD for waiving the relevant stamp duty payment.

In the area of personal income tax, the Policy Address included a hike to the deduction ceiling for home loan interest or domestic rents from the current HKD100,000 to HKD120,000 for taxpayers residing with their first-born child on or after October 25, 2023, until the child reaches the age of 18. Further, a new deduction will be introduced for expenses on assisted reproductive services, subject to a ceiling of HKD100,000 per year.