Follow us

Part II – What is stamp duty and how much is it in Hong Kong?

April 18, 2017

This is Part II in our series on “What is stamp duty and how much is it in Hong Kong? To understand what kind of documents and which persons are liable for stamping as well as which events attract stamp duty, see Part I.

How can I get a document stamped?

There are several ways to get a document stamped:

  • Conventional Stamping;
  • e-Stamping; and
  • Paper application of property documents.

Conventional Stamping

Under the conventional stamping procedure, you have to present the original instrument with a stamping request and supporting documents at the Stamp Office Counter, apart from Tenancy Agreements which can be sent by post. This mode of stamping is applicable for all types of instruments including property documents and those relating to stock transactions. The Stamp Office will either issue a stamp certificate in respect of the instrument or impress a stamp on the document upon receiving the stamping request with the required document(s) and payment.

e-Stamping

The e-Stamping system is an alternative mode of stamping to manual stamping. Instead of conventional stamps, it generates stamp certificates that are issued instantly upon receipt of stamp duty through online mode or within 2 working days after receipt of stamp duty through offline mode. It can be used for instruments related to property transactions, namely agreement for sale, assignment and tenancy agreement.

Learn more about e-Stamping

Paper application of property documents

For agreements and assignments, as well as Tenancy Agreements, you may submit an application for stamping without presenting the original instrument in paper form at the Stamp office.

Access more resources on the methods of stamping

Try Dragon Law for Free. Get started.

What happens when I stamp my documents late or omit to stamp my documents?

There is a time limit by which you have to stamp your documents, and this varies depending on the type of document.


Nature of document Time limit
Conveyance on sale (including deed of gift) Within 30 days after the date of execution.
Agreement for sale of residential property Within 30 days after the relevant date (which means the date of the agreement, or, the date of the earliest agreement made by the same parties on the same terms if the agreement to be stamped is preceded by one or more such agreements), except otherwise provided in the Ordinance.
Agreement for sale of residential property (Deferred Payment Cases)
  • If completed by Assignment:
    within 30 days after execution of the related Assignment.
  • If resale/disposal before Assignment:
    within seven days after date of re-sale or disposition.
  • For all cases, the maximum period of deferment is three years after the relevant date of the agreement.
Lease Within 30 days after the date of execution.
Contract note for purchase or sale of Hong Kong stock Within two days after the sale or purchase, if effected in Hong Kong;
within 30 days after the sale or purchase, if effected elsewhere.
Instrument of Transfer of Hong Kong stock (not including gift) Before the date of execution, if executed in Hong Kong;
within 30 days after the date of execution, if executed outside Hong Kong.
Gift of Hong Kong stock. Within seven days after the date of execution, if executed in Hong Kong;
within 30 days after the date of execution, if executed outside Hong Kong.

Source: GovHK

Should you fail to stamp your document before or within the time for stamping, your document may be stamped by the Collector, with a penalty, upon payment of the stamp duty.


Length of Delay Penalty
Not exceeding one month Double the amount of stamp duty.
Exceeding one month but not exceeding two months Four times the amount of stamp duty.
In any other case 10 times the amount of stamp duty.

 

Source: GovHK

Is there anything that you should look out for when stamping your documents in Hong Kong?

Share with us in the comments below!

Part I: What is stamp duty and how much is it in Hong Kong?

This is Part I in our series on “What is stamp duty and how much is it in Hong Kong? To learn more about how to get a document stamped and time limits on stamping, see Part II.

As the owner of a small business or an entrepreneur-to-be, there may be many instances where you will required to produce documents and have them stamped. For example, issuing new shares. In this case here are two main ways of doing this: by issuing new shares or by transferring shares by way of a sale or gift. For the latter (i.e. whenever shares are transferred by an existing shareholder to any third party), stamp duty must be paid on those shares.

While these are relatively simple procedures, it is important to understand the basic requirements of how to carry them out to ensure compliance with the relevant regulations governing the issue and transfer of shares in your jurisdiction.

Learn more about issuing and transferring shares

What is stamp duty?

Stamp duty is a tax that is levied on documents relating to the sale, transfer and lease of properties, such as immovable properties, stocks and shares. Individuals that pay the tax receive a stamp on their documents. The exact documents that attract stamp duty varies from jurisdiction to jurisdiction.

What kind of documents and persons are liable for stamping?

According to the Stamp Duty Ordinance (Cap. 117) of Hong Kong, the following types of documents are subject to stamp duty:


Nature of document Persons liable
Conveyance on sale All parties and all other persons executing.
Agreement for sale and purchase All parties and all other persons executing.
Lease All parties and all other persons executing.
Transfer of Hong Kong stock:
  • Contract Note for the sale or purchase of  any Hong Kong stock
  •  

  • Transfer of any other kind
  • The agent or where no agent, the principal effecting the sale or purchase
  • The transferor and the transferee.


Source: GovHK

Should a chargeable instrument not be duly stamped, any person who uses such instrument is liable to the stamp duty and any penalty.

How much is stamp duty in Hong Kong?

The stamp duty rates and their method of calculation vary, depending on the type of transaction, the nature of the document, and the date on which the document is executed. Transfer of Hong Kong stock

For Hong Kong stock, stamp duty is calculated as follows:


Nature of document Rate (with effect from 1 September 2001)
Contract Note for sale or purchase of Hong Kong stock 0.1% of the amount of the consideration or of its value on every sold note and every bought note.
Transfer operating as a voluntary disposition inter vivos HKD 5 + 0.2% of the value of the stock to be transferred.
Transfer of any other kind HKD 5.

Lease

For lease of immovable property in Hong Kong, stamp duty is calculated at rates which vary with the term of the lease as follows:


Term Rate
Not defined or is uncertain 0.25% of the yearly or average yearly rent (Note 1a).
Does not exceed 1 year 0.25% of the total rent payable over the term of the lease (Note 1a).
Exceeds 1 year but does not exceed 3 years 0.5% of the yearly or average yearly rent (Note 1a).
Exceeds 3 years 1% of the yearly or average yearly rent (Note 1a).
Key money, construction fee etc. mentioned in the lease 4.25% of the consideration if rent is also payable under the lease. Otherwise, same duty as for a sale of immovable property.

Learn more about the key terms to look out for in a Commercial Lease

Try Dragon Law for Free. Get started.

Sale or transfer of immovable property

With effect from 23 February 2013, stamp duty on sale or transfer or immovable property in Hong Kong is chargeable with ad valorem stamp duty (AVD) at Scale 1 rates, as follows:


Amount of value of the consideration Rate
Exceeds Does not exceed
HKD 2,000,000 1.5%
HKD 2,000,000 HKD 2,176,470 HKD 30,000 + 20% of excess over HKD 2,000,000
HKD 2,176,470 HKD 3,000,000 3%
HKD 3,000,000 HKD 3,290,330 HKD 90,000 + 20% of excess over HKD 3,000,000
HKD 3,290,330 HKD 4,000,000 4.5%
HKD 4,000,000 HKD 4,428,580 HKD 180,000 + 20% of excess over HKD 4,000,000
HKD 4,428,580 HKD 6,000,000 6%
HKD 6,000,000 HKD 6,720,000 HKD 360,000 + 20% of excess over HKD 6,000,000
HKD 6,720,000 HKD 20,000,000   7.5%
HKD 20,000,000 HKD 21,739,130 HKD 1,500,000 + 20% of excess over HKD 20,000,000
HKD HKD 21,739,130 8.5%

AVD is payable at Scale 1 for agreements for the sale for the acquisition of any residential property or non-residential property, if the agreement is executed on or after 23 February 2013, unless specifically exempted or otherwise provided.

Access the Stamp Duty Rates Table

See Part II to learn more about how to get a document stamped and time limits on stamping.

The comprehensive guide to Singapore budget 2017: SME edition

April 5, 2017

The Singapore Budget 2017 that was announced earlier this year was received with much excitement by the rest of Singapore, and one group of stakeholders in particular – Singapore’s small and medium enterprises (SMEs). The nearly 190,000 SMEs in Singapore that make up 99% of businesses contribute to nearly half of the gross domestic product and employ more than 70% of Singapore’s workforce. As more details about the various Budget 2017 initiatives become available in the weeks following the Committee of Supply debates, we give you a comprehensive overview of how your SME can harness the Budget initiatives to stay ahead of the curve:  

1. Up your team’s skills and productivity with training support

First introduced in 2015, the Adapt and Grow initiative that aims to help Singaporeans adapt to changing job demands and grow their skills appears has proven effective, with 7 in 10 of the 10,000 rank-and-file workers placed through the Adapt and Grow career matching services in 2015 remaining in employment for at least 6 months after their placements.

The Adapt and Grow initiative underwent new enhancements that took effect on 1 April 2017:

Enhanced Career Support Programme (CSP)

What is it?

Businesses stand to receive up to SGD 42,000 in salary support when they hire Professionals, Managers, Executives or Technicians (PMETs) who are made redundant, or unemployed and actively looking for jobs for at least six months, in jobs that pay at least SGD 3,600 (for SMEs) or SGD 4,000 (for non-SMEs)

The eligibility criteria for employers are as follows:-
Any company registered in Singapore who;

  • Employs eligible PMET with minimum monthly gross salary of SGD 3,600;
  • Employs eligible* PMET job seeker on a permanent or contract basis for at least 12 months;
  • Provides eligible PMET with approved On-The-Job training (OJT) or WSG-approved courses.

Enhanced Professional Conversion Programmes(PCP)

What is it?

Businesses stand to receive 70% to 90% in course fee grant and salary support when they hire PMETs who are looking to switch careers, with enhanced support of up to 90% available for SMEs or PMETs aged 40 years and above. This includes both Place-and-Train and Attach-and-Train opportunities. The eligibility criteria for employers are as follows:

  • Registered or incorporated in Singapore;
  • Must offer employment directly relevant to the PCP, with remuneration commensurate with prevailing market rates;
  • Commit to PCP training arrangements;
  • Commit to work with WSG or its appointed partner on programme administrative requirements.

Enhanced Reskilling for Jobs – Work Trial

What is it?

Businesses have the opportunity to assess a jobseeker’s fit via a cost-free short-term work trial of 40-480 hours per job seeker before offering employment. The enhancements include:

  • An additional Retention Incentive of SGD 1,000 at the 6 month retention mark for Singapore citizens who had been unemployed for 12 months or more prior to taking up the Work Trial; and
  • Salary support at 30% of monthly salary for 6 months, capped at SGD 600 per month for employees who hire Singapore citizens who have been unemployed for 12 months or more.

2. Remunerate your workers better with employer support schemes

Beyond receiving more support to hire workers looking to switch careers, SMEs can also remunerate their workers better with schemes aiming to help firms cope with rising wages:  

Extended Wage Credit Scheme(WCS)

What is it?

Budget 2017 continued to extend the scheme, which now co-funds 20% of wage increases given to Singaporean employees earning a gross monthly wage of SGD 4,000 and below.

The eligibility criteria for employers are as follows. All employers paying wage increases in 2013 – 2017 to Singaporean Singapore Citizen employees who:

  • Are earning a gross monthly wage of SGD 4,000 and below;
  • Received CPF contributions from a single employer for at least 3 calendar months in the preceding year;
  • Have been on the employer’s payroll for at least 3 calendar months in the qualifying year (i.e. employer must have paid employee CPF contributions for at least three calendar months* in qualifying year); and
  • Have at least SGD 50 gross monthly wage increase.
  • Must not also be the business owner of the same entity (i.e. sole proprietor of the sole proprietorship, or a partner of the partnership, or both a shareholder and director of a company)

Special Employment Credit (SEC)

What is it?

The SEC, which was extended for 3 years from 1 January 2017 to 31 January 2019, provides wage offsets to employers hiring Singaporean workers aged 55 and above and earning up to SGD 4,000 a month, and persons with disabilities.

The eligibility criteria for employers are as follows. Employers who:

  • hire Singapore Citizen employees aged above 50 years and earning up to SGD 4,000 per month; and
  • make regular Central Provident Fund (CPF) contributions for these eligible employees.

Additional Special  Employment Credit (ASEC)

What is it?

The ASEC will be extended for 2.5 years, from 1 July 2017 to 31 December 2019, and continue to support workers older than the re-employment age, as well as those above 65 years old as of 1 July 2017 and hence not covered by the increase in re-employment to 67.

Related reading: 5 top tips for onboarding new hires

3. Innovate and gain a competitive advantage with greater access to tech

Singapore Budget 2017 has been hailed as one that is “about changing the way things are done here so as to help Singapore stay ahead of the curve in the disruptive economy”. In his Budget 2017 speech, Singapore’s Finance Minister Heng Swee Keat identified capabilities businesses will need as Singapore matures as an economy and competes on the quality and novelty of ideas and ability to create value: the ability to use digital technology and embrace innovation.

In terms of the big picture, 23 Industry Transformation Maps (ITMs) were rolled out under the SGD 4.5 billion Industry Transformation Programme in Budget 2016 to help companies drive innovation and productivity. Six of these ITMs have been implemented. Under Budget 2017, the National Research Fund will be topped up by SGD 500 million and National Productivity Fund will be increased by SGD 1 billion.

Source:

Ministry of Trade and Industry Singapore

Beyond enhancing their own digital capabilities, SMEs have also been encouraged to take a more proactive approach towards becoming more innovative. Several programmes by the Agency for Science, Technology and Research (A*STAR) aim to strengthen SMEs’ capacity for innovation by upgrading their technical capabilities, improving access to intellectual property (IP) and enabling faster time to market:

SMEs Go Digital (CSP)

What is it?

Administered by the Info-communications Media Development Authority (IMDA) in collaboration with other sector lead agencies, the programme aims to provide a more focused and structured support for SMEs seeking to go digital, whether this is for basic needs such as accounting software or advanced needs such as data analytics and cybersecurity. Businesses can take advantage of this initiative by:

  • Contacting a SME Centre
  • Securing a referral to the new SME Digital Tech Hub to be launched by the end third quarter of 2017; and
  • Working with IMDA to apply new & emerging tech solutions.

A*STAR Operation and Technology Roadmapping (OTR)

What is it?

A*STAR works with firms to conduct operation and technology roadmapping to identify how tech can help them innovate, by 5 half-day sessions covering topics such as Market/Technology Drivers and Game-Changing Products/Service. This initiative will expand its efforts to support 400 companies over the next 4 years. All Singapore-registered businesses with at least 30% of the shares owned by Singapore Citizens or Singapore Permanent Residents are eligible.

A*STAR Headstart Programme

What is it?

SMEs that enter into a Research Collaboration Agreement (RCA) with A*STAR can now enjoy royalty-free and exclusive licenses of IP developed, for the first 36 months. For companies seeking access to IP, the IP intermediary will work with the Intellectual Property Office of Singapore to analyse and bundle complementary IP from Singapore and overseas. Employees who are eligible are as follows:
Applicable to all SMEs that enter into a RCA with A*STAR.

4. Free up funds to strengthen business operations with loans & tax rebates

As a small business, many of the pain points that you face can be attributed to the limited time, energy and resources you have to run business operations and implement long-term strategy. These options to access financing and save up with tax rebates are thus welcome:

Corporate Income Tax (CIT) Rebate

What is it?

For Year of Assessment (YA) 2017, companies will be granted a 50% CIT Rebate capped at SGD 25,000 (up from SGD 20,000 in 2016). The Rebate will continue into YA 2018, with a 20% CIT Rebate capped at $10,000.

Who is eligible?

Given to all companies to help them with rising business costs.

SME Working Capital Loan

What is it?

Launched on 1 June 2016, the SME Working Capital Loan will continue to be available until 31 May 2019 to help local enterprises access unsecured working capital financing in a period of slow economic growth. Local SMEs can apply for loans of up to SGD 300,000 to fund daily operations, with a repayment period of up to 5 years. The government co-shares 50% of the default risk of such loans with participating financial institutions in order to encourage lending to SMEs. Who is eligible?
The eligibility criteria for companies are as follows:

  • Company registered and operating in Singapore;
  • At least 30% local shareholding; and
  • Group annual sales of ≤ SGD 100m or group employment size ≤ 200

Looking for tips on how to draft better contracts in order to optimise your cash flow?

Download your free eBook now

5. Expand into the region with internationalisation opportunities

According to an Internationalisation Survey of 700 companies in major sectors conducted by International Enterprise Singapore, internationalisation has become the key engine of growth for Singapore companies. In 2016, the overseas revenue or SMEs formed 53% of total revenue, a 3% increase from the previous year. As Singapore’s SMEs look to international markets for opportunities to grow their business, Budget 2017 promises to provide support in this direction.

The details on the new initiatives are limited at present, but SMEs can look forward to more information about the following in time to come:

  • International Partnership Fund: Budget 2017 commits up to SGD 600 million to set up this new fund managed by a unit of Temasek Holdings that will help Singapore-based companies increase their presence on the global market, by co-investing with these firms.
  • Global Innovation Alliance: With programmes such as the Innovators Academy for tertiary students, Innovation Launchpads for entrepreneurs and Welcome Centres for innovative foreign firms, this initiative aims to help Singaporeans gain experience abroad, make connections and collaborate with their counterparts in other innovative cities such as Beijing and San Francisco.  

How does your SME plan to take advantage of Budget 2017?

Share with us in the comments below!

Important changes to Singapore employment laws

Recent changes have been made to employment laws in Singapore, and all businesses must now update the way they provide itemised pay slips to their employees.

Below, we outline a summary of the new changes and how to create the new itemised pay slips so that your business stays compliant.

Create My Payslips

Dragon Law have updated their Itemised Pay Slip document to reflect these changes. Log in to your Dragon Law account to create the new pay slips for your employee and get compliant today!

Don’t already have itemised pay slips in place? Sign up to a Dragon Law account today and put itemised pay slips in place for your employees to stay compliant.

What is an Itemised Pay Slip

It is a pay slip issued by an employer to an employee. Starting 1 April 2016, it is mandatory for employers to issue itemised pay slips to all employees covered by the Employment Act.

When drafting an Itemised Pay Slip, it is important for you to focus on the following:

  • Start and end date of the salary period covered by the pay slip;
  • Date of payment;
  • Amount of payments e.g. basic salary, allowances (including all fixed allowances such as transport, and ad-hoc allowances such as a one-off uniform allowance), overtime pay (set out details including the number of overtime hours worked), and other additional payments (e.g. bonuses, rest day pay, public holiday pay). In the Dragon Law app, you can also input some details for these items. If the basic salary is calculated by time rate or piece rate, input the basic rate of pay and the total number of hours or days worked or pieces produced;
  • Amount of deductions e.g. employee’s contribution to the Central Provident Fund or deductions for no-pay leave or absence from work; and
  • Net salary paid in total.

Which of my employees will this effect?

The Employment Act states that everyone who is an employee, local or foreign, full-time or part-time, temporary or permanent, is covered, except:

  • Managers and excutives with monthly basic salary of more than SGD 4,500;
  • Seafarers;
  • Domestic workers; and
  • Statutory board employees or civil servants.

When should I issue the Itemised Pay Slip?

Itemised Pay Slips should be given together with payment to your employee, or if this is not possible, you should provide the payslip within three working days of payment.

In the unfortunate event that you terminate or dismiss an employee, you must give them the Itemised Pay Slip together with their outstanding salary.

Do I need to keep a record of the issued Itemised Pay Slips?

Yes. In the case of your current employees, the Itemised Pay Slips must be kept by you for two years. For your former employees, you need to keep Itemised Pay Slips for the last two years of their employment for one year after their employment was terminated.

You should note that from 1 April 2016, all employers must issue itemised pay slips to employees covered by the Employment Act. Failure to issue itemised pay slips could result in a financial penalty, so it’s important that you update your itemised pay slips as soon as possible.

The Entrepreneur’s Guide to Setting Up a Business in New Zealand

New Zealand is an attractive location for doing business, taking second place in Forbes’ Best Countries for Business in 2017. If you’re an entrepreneur looking to start up in New Zealand so you can take advantage of the tightly-networked yet laid-back and creative culture in this startup hub, look no further. We have put together a comprehensive guide for setting up a business in New Zealand.

Also read:The Ultimate Guide to the Startup Community in New Zealand

Source business.gov.nz

Registering your business

In order to register your business in New Zealand, you need to apply online for registration with the New Zealand Companies Office.

 

Decide on business name

The first step would be to reserve your company name online. Your company name must be unique and can be reserved for up to 20 working days with the Companies Office. To ensure that your business name is unique, search on ONECheck to confirm that the name you want is not already protected. Applying for a name to incorporate your company costs NZ$10.22 and the applications received during normal business hours will be processed within two hours.

Register your business online

In order to incorporate your company, first get a RealMe login. Once logged in, click on the Complete Coy Application link within your task list. You will be required to provide some basic details about your company, including:

  • Company address;
  • Annual return filing month;
  • Directors;
  • Shares & shareholders;
  • Constitution (optional); and
  • Tax registration (recommended).

After your review your application details and pay the application fee of NZD 150, applications to incorporate the company will be processed automatically. You should receive an email providing you with consent forms for the directors and shareholders to sign and return. You will need to upload the signed director and shareholder consents within 20 working days of when the company name was reserved in order for the certificate of incorporation to be issued.

After incorporation

Once your company is incorporated, it is time to get your business up and running.

Ensure compliance with local laws

Each territorial authority has its own rules regulating business activity on issues such as fair trading, consumer guarantees, privacy and health and safety. Check what these rules are at Compliance Matters, where you can quickly create an action list, complete and keep track of tasks online.

Determine tax obligations

If you have registered as a company or will be earning more than NZD 60,000 per year, it is mandatory to register for GST online with Inland Revenue. Use the Tool for Business to sort out your small business tax issues quickly and simply.

Get a lawyer, accountant and bank account

Set up a bank account for business purposes, and seek legal and financial advice.

  • New Zealand Law Society
  • New Zealand Institute of Chartered Accountants
Try Dragon Law for Free. Get started.

File annual returns

It is important to file an annual return with the Companies Office regardless of whether your company is trading or it risks being removed from the register.

Do you have any additional tips for setting up your business in New Zealand?

Share with us in the comments below!