How much stamp duty is payable on Hong Kong share transfers

Stamp Duty on Shares in Hong Kong: Rates and Calculation

Stamp duty on shares in Hong Kong is charged at 0.1% from the buyer and 0.1% from the seller, plus a fixed HK$5 on the instrument of transfer. The duty is calculated on the higher of the consideration paid or the value of the shares being transferred. Both the buyer and the seller are liable to pay their respective portions, and the transfer is not registered in the company's register of members until the instrument has been stamped.

How the Duty Is Calculated

The total stamp duty payable on a share transfer is the sum of three components:

• Buyer's ad valorem duty: 0.1% of the higher of the consideration or the value of the shares
• Seller's ad valorem duty: 0.1% of the higher of the consideration or the value of the shares
• Fixed duty: HK$5 per instrument of transfer

For example, if shares are sold for HK$100,000 but their market value is HK$120,000, the duty is calculated on HK$120,000. The buyer pays HK$120 and the seller pays HK$120, plus the HK$5 fixed fee, making HK$245 total.

Instrument of Transfer Stamp Duty Hong Kong

The instrument of transfer is the legal document that formally transfers ownership of shares from the seller to the buyer. The Hong Kong Stamp Duty Ordinance (Cap. 117) requires this document to be presented to the Collector of Stamp Revenue for adjudication and payment of duty before the transfer is effective. The instrument bears the fixed HK$5 stamp, and the ad valorem duty is paid by way of stamps affixed to the bought and sold notes.

Bought and Sold Notes Stamp Duty Hong Kong

Bought and sold notes are the contract notes issued by a broker to the buyer and seller when shares are traded on or off the Hong Kong stock exchange. Each note must be stamped with the appropriate ad valorem duty at 0.1% of the consideration or value. If the transfer is made without a broker, the parties must still prepare and stamp their own bought and sold notes before the instrument of transfer can be processed.

Ad Valorem Stamp Duty Hong Kong

Ad valorem stamp duty is the proportionate charge applied to the value of the shares, as opposed to the fixed HK$5 fee on the instrument. The duty is levied on the higher of the consideration actually paid and the market value of the shares at the date of transfer. This prevents parties from understating the price to reduce the duty. The Inland Revenue Department may assess the market value if the consideration does not appear to reflect it.

When Duty Must Be Paid

Stamp duty must be paid at the time the instrument of transfer is executed. The instrument is then presented to the Stamp Office for adjudication. Once the duty is paid and the instrument is duly stamped, the company may register the transfer in its register of members. The company is required to refuse registration if the instrument has not been properly stamped.

Exemptions and Reliefs

Certain transfers are exempt from ad valorem stamp duty:

• Transfers between associated companies within the same group, subject to conditions
• Transfers of shares in a Hong Kong company that are listed on a recognised stock exchange and traded through the Central Clearing and Settlement System
• Transfers on death or by operation of law

The fixed HK$5 fee still applies in most cases, including exempt transfers, unless a specific statutory exemption is available.

Practical Steps for a Share Transfer

1. Prepare the instrument of transfer (Form IRSD108).
2. Prepare bought and sold notes stating the consideration.
3. Present the documents to the Stamp Office for adjudication.
4. Pay the ad valorem duty and the HK$5 fixed fee.
5. Submit the stamped instrument to the company to update the register of members.

The register of members is updated only after the instrument is duly stamped and the directors approve the transfer.