Hong Kong’s Financial Secretary, John C Tsang, made the traditional post-budget speech at the Joint Business Community Luncheon on March 12 and, in particular, reviewed the tax measures taken to increase the transaction cost of property speculation so as to reduce the risk of a property bubble being created.
In the budget, the government proposed that from April 1, stamp duty on properties valued at over HKD20m (USD2.6m) will be raised from 3.75% to 4.25%, and buyers will no longer be allowed to defer payment of stamp duty on such transactions. The government will also closely monitor the trading of properties valued at or below HKD20m. If there is excessive speculation in the trading of these properties, the government will consider extending the measures to these transactions.
He reminded his audience and taxpayers that “the Inland Revenue Department has established procedures to track property transactions involving speculation. If these transactions were found to constitute a business, we will levy profits tax, the current rate is 16.5%, on those concerned for profits arising from such transactions.”
While the government will also work to ensure transparency in property transactions and strengthen market regulations, the government will also “prevent the excessive expansion of mortgage lending and ensure banks process mortgage loan applications prudently. We will introduce further measures when it is necessary to strengthen further the prudent regulation of our banks.”
He emphasized that the “basket of measures is not introduced to be a quick-fix, and it does not come with a promise of overnight results.” The measures should, he added, “send a clear and strong message to the market, and to the public of our intentions to curb property speculation and dampen price fluctuations.”
He confirmed that the government would continue to monitor market developments closely, and that, in his opinion, the budget contained appropriate measures to promote long-term stability of the property market. However, he concluded that, “if need be, we will implement additional measures to cool speculation.”A comprehensive report in our Intelligence Report series dealing with the issues raised by international property investment, and the possible taxation implications raised by such purchases, with an account of the likely (and some less obvious) potential countries for your consideration, is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report15.asp
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According to preliminary media reports, on January 12, 2018, the Czech Republic and South Korea signed a DTA to replace their existing pact.
According to a January 12, 2018, update from the Irish Revenue, the country's DTA with Kazakhstan became effective on January 1, 2018, having entered into force on December 29, 2017.
Japan and Argentina launched DTA negotiations on January 10, 2018.
The United Arab Emirates Cabinet on January 7, 2018, approved two double tax agreements concluded with Moldova and Croatia.
Taiwanese Premier Lai Ching-Te has directed the Ministry of Finance to work towards a Taiwan-US tax treaty.
Cyprus and Saudi Arabia signed a DTA on January 3, 2018.
According to preliminary media reports, Colombia and Japan are negotiating a DTA.
Georgia and Moldova signed a DTA on November 29, 2017.
Luxembourg and Kosovo signed a DTA on December 8, 2017.
Switzerland and the United Kingdom signed a DTA Protocol on November 30, 2017.
According to an update from the Liechtenstein Government, the new DTA with the United Arab Emirates will become effective from January 1, 2018.
According to preliminary media reports, the Netherlands and Liechtenstein held a first round of DTA negotiations over three days ending November 17, 2017.
Saudi Arabia's Cabinet on November 28, 2017, authorized the signing of a DTA with Bulgaria.
Bahrain's Cabinet has approved the signing of a new DTA with Hong Kong, the state news agency said November 13, 2017.
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Finland on November 2, 2017, confirmed that a new DTA signed with Germany will be effective from January 1, 2018.
The DTA between Cyprus and Iran will become effective from January 1, 2018.
India ratified a third Protocol to its DTA with New Zealand on November 2, 2017, publishing a Notice in its Official Gazette.
Gibraltar and the United Kingdom are considering launching negotiations towards a DTA, according to recent comments from the UK's Economic Secretary to the Treasury.
Barbados and Italy have exchanged instruments of ratification in respect of a DTA, which will now become effective from January 1, 2018.
Switzerland's Government on October 25, 2017, adopted a dispatch on the DTA concluded with Pakistan, enabling its ratification.
Spain and Portugal signed a DTA on October 18, 2017.
Pakistan and Latvia initialed a DTA on October 25, 2017.