In brief
On 2 October 2026, Hong Kong published the Stamp Duty (Amendment) (No. 3) Bill 2026 (“Bill”) in the Gazette, following the 2026/27 Budget and the legislative proposal released earlier this year. The Bill proposes to relax the eligibility criteria for stamp duty relief under section 45 of the Stamp Duty Ordinance (Cap. 117) (“SDO”) for intra-group transfers, with a view to facilitating business expansion and restructuring while maintaining the competitiveness of Hong Kong’s tax regime.
Key enhancements
Section 45 of the SDO currently provides stamp duty relief for transfers of Hong Kong immovable property or Hong Kong stock between associated bodies corporate, provided that specified conditions are met. Under the existing regime, two bodies corporate are regarded as associated where one is the beneficial owner of at least 90% of the issued share capital of the other, or a third body corporate is the beneficial owner of at least 90% of the issued share capital of each of them.
The Bill is a legislative response to the Court of Final Appeal’s decision in John Wiley & Sons UK2 LLP and Another v The Collector of Stamp Revenue [2025] HKCFA 11. In that case, the Court held that a UK limited liability partnership did not have “issued share capital” and therefore could not satisfy the association test under section 45 as it currently stands.
Broadened scope of eligible bodies corporate and lowered association threshold
The Bill proposes a new “associating interest” test. Two bodies corporate would be regarded as associated if:
- One body corporate has an associating interest in the other; or
- A third body corporate has an associating interest in both of them.
A body corporate (“body corporate A”) would have an associating interest in another body corporate (“body corporate B”) if, directly or indirectly, it:
- Has at least 75% of the beneficial interest in body corporate B; or
- Is entitled to exercise, or control the exercise of, at least 75% of the voting rights in body corporate B.
Specifically, if body corporate B has issued share capital, the extent of body corporate A’s beneficial interest in body corporate B would be determined by reference to the percentage of body corporate B’s issued share capital (however described) held by body corporate A. If body corporate B does not have issued share capital, the beneficial interest would instead be determined by reference to the percentage of body corporate A’s ownership interest in body corporate B. An ownership interest means an interest that carries rights to body corporate B’s profits, capital or reserves and is accounted for as equity under applicable accounting principles.
Where the associating interest between bodies corporate arises from the entitlement to exercise, or control the exercise of, voting rights, the voting rights attributed to body corporate A would include all voting rights that are, or may be required to be, exercised on behalf of, or at the direction of, body corporate A.
As under the existing regime, the extent of a body corporate’s indirect interest in another body corporate would be determined by multiplying the percentages of beneficial interest or voting rights at each level of the chain.
In essence, the new associating interest test is no longer confined to bodies corporate having issued share capital. This expands the scope of bodies corporate eligible for intra-group relief to include, for example, limited liability partnerships and companies limited by guarantee, which do not issue shares.
Anti-abuse provisions
The existing anti-abuse safeguards under section 45 would be retained, with consequential amendments to reflect the new beneficial interest and voting rights tests. Stamp duty relief may be denied or withdrawn where (i) a non-associated third party directly or indirectly finances the consideration, or (ii) the transferor and transferee cease to be associated within the relevant two-year period.
Implementation timeline
The Bill was introduced into the Legislative Council for First Reading on 14 October 2026. Subject to legislative enactment, the enhanced stamp duty relief regime would take effect retrospectively from 25 February 2026.
As a transitional arrangement, instruments executed on or after 25 February 2026 and before the gazettal of the amendment ordinance may be submitted to the Stamp Office for adjudication. Upon enactment, the Stamp Office will formally adjudicate instruments that satisfy the criteria under the enhanced regime, without requiring duty payers to pay stamp duty upfront.
Key takeaways
The proposed amendments would significantly relax Hong Kong’s intra-group stamp duty relief regime. Moving from a 90% issued-share-capital test to a 75% test based on either beneficial interest or voting rights would allow a broader range of group structures, including bodies corporate without issued share capital, to qualify for section 45 relief. The lower association threshold would also bring Hong Kong’s regime closer to comparable intra-group relief regimes in the United Kingdom and Singapore.
Businesses contemplating intra-group transfers involving Hong Kong immovable property or Hong Kong stock should consider whether transactions executed on or after 25 February 2026 may qualify under the proposed rules.
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