Key Takeaways
- The Stamp Duty (Amendment) (No. 3) Bill 2026 will be gazetted on 2 October 2026 and introduced into the Legislative Council on 14 October 2026.
- The ownership threshold for associated bodies corporate will fall from 90 per cent to 75 per cent.
- Direct or indirect beneficial interests and voting rights will count towards association, not only issued share capital.
- Entities without share capital, such as limited liability partnerships and companies limited by guarantee, can qualify for relief.
- The change applies to instruments executed on or after 25 February 2026, subject to passage by the Legislative Council.
- The measure implements a proposal in Hong Kong's 2026-27 Budget to sharpen the competitiveness of the tax regime.
What Changes Under the Amendment Bill?
Corporate groups with at least 75 per cent ownership could soon access broader relief. The proposal also recognises beneficial interests and voting rights. In this article, we explain the association test, eligible entities and timing under the Bill.
The Bill would amend the association test in the Stamp Duty Ordinance (Chapter 117), subject to its passage by the Legislative Council. That test grants relief on transfers of immovable property or Hong Kong stock between associated bodies corporate. Under the existing rules, association requires at least 90 per cent issued-share-capital ownership. Alternatively, a third body corporate must hold at least 90 per cent of each entity.
The amendment makes two substantive changes. First, the ownership threshold falls from 90 per cent to 75 per cent. This widens the range of group structures that meet the test. Second, direct or indirect beneficial interests and voting rights will count alongside issued share capital. A parent can therefore demonstrate association through equity or participation interests. This applies even where a subsidiary has no shares at all.
Groups just below the 90 per cent threshold may benefit substantially. Transfers of Hong Kong property or shares can attract ad valorem stamp duty. Non-residential transactions may face rates of up to 4.25 per cent. Residential property may attract higher rates. Under the proposed test, qualifying transfers may receive relief, subject to section 45 conditions and legislative passage. According to the Inland Revenue Department (IRD), the 2026-27 Budget proposed expanding eligible associated bodies corporate under section 45.
Who Benefits from the Relaxed Rules?
The clearest beneficiaries are enterprise groups using modern structures without conventional share capital. Some entities do not issue shares, so they previously fell outside the relief. The Government specifically identifies limited liability partnerships and companies limited by guarantee. Association had previously depended only on issued share capital.
After passage, ownership may be evidenced through direct or indirect beneficial interests. These include equity interests and participation interests. These vehicles can support fund management, professional practices, non-profit subsidiaries and joint ventures. Groups using them may restructure without a duty charge, if section 45 conditions are met.
Businesses planning group reorganisations during Hong Kong company incorporation should review their structures early. Listings and regional expansions can also prompt consolidation of group assets. Subject to enactment, instruments executed on or after 25 February 2026 may qualify under the relaxed test; before enactment, duty payers may submit adjudication requests to the Stamp Office. The 75 per cent threshold offers greater flexibility for minority placements and pre-IPO reorganisations.
When Does the New Regime Take Effect?
The Stamp Duty (Amendment) (No. 3) Bill 2026 is scheduled for gazettal on 2 October 2026. It is due to reach the Legislative Council on 14 October for first reading and second-reading debate. These dates follow the Government's legislative timetable.
Subject to passage by the Legislative Council, the relaxed criteria apply to instruments executed on or after 25 February 2026. That date matches the Budget proposal's commencement. Before enactment, qualifying duty payers can submit an adjudication request to the Stamp Office. They do not need to pay duty first and seek a refund. The IRD has not stated that already-stamped instruments require refund or reassessment applications. Groups should seek confirmation from the Stamp Office for any already-stamped instrument.
The 2026-27 Budget also increases the rate for residential property above HK$100 million to 6.5 per cent. Businesses should track these changes because they affect transaction costs.
How the Bill Strengthens Hong Kong's Business Environment
The Government has presented the amendment as a competitiveness measure. Group expansion and restructuring often require asset transfers. Subject to legislative passage and section 45, more enterprises may qualify for relief. That could reduce friction in reorganisations.
In practice, groups may lower costs when moving Hong Kong stock or property between entities. This matters to regional headquarters, holding companies and mainland enterprises using Hong Kong as a structuring hub. A broader test also reduces incentives to engineer ownership solely around the 90 per cent threshold. It can simplify compliance for groups and their corporate advisers.
The Bill forms part of a wider 2026-27 Budget effort to lower transaction costs. Related measures include:
- a one-off tax reduction for the 2025/26 assessment year;
- a stamp duty waiver for non-residential property transfers into real estate investment trusts.
We help clients assess eligibility and plan intra-group transfers before commencement.
Frequently Asked Questions
The Stamp Duty (Amendment) (No. 3) Bill 2026 lowers the association threshold from 90 per cent to 75 per cent. Association can now be established through direct or indirect beneficial interests or voting rights, not only issued share capital.
Relief applies to transfers of immovable property or Hong Kong stock between associated bodies corporate under section 45 of the Stamp Duty Ordinance. The relaxed criteria widen the range of entities regarded as associated.
Subject to passage by the Legislative Council, the relaxed criteria apply to instruments executed on or after 25 February 2026. The Bill will be gazetted on 2 October 2026 and has its first reading on 14 October 2026.
Yes. Limited liability partnerships, companies limited by guarantee and similar entities can qualify because association may now be evidenced through direct or indirect beneficial interests such as equity or participation interests.
The measure implements a 2026-27 Budget proposal. It is intended to help more enterprises benefit from relief on intra-group transfers, enhance the business environment and strengthen the competitiveness of Hong Kong's tax regime.
