Imagine saving HK$1.5 million on a HK$10 million property purchase, or seeing your stock trading costs drop by 23% overnight. This isn’t a hypothetical scenario—it’s the reality in Hong Kong following the most significant stamp duty reforms in over a decade. From November 2023 through February 2025, the Hong Kong government has transformed its stamp duty landscape, abolishing restrictive “spicy taxes” and reducing transaction costs to stimulate economic activity and enhance the city’s competitiveness as a global financial hub.

The Big Picture: Why Hong Kong Reformed Its Stamp Duty System

Hong Kong’s stamp duty reforms didn’t happen in a vacuum. They were a strategic response to significant economic challenges facing the city. Residential property prices fell by 7% in 2023, while transaction volumes plummeted from approximately 74,000 units in 2021 to just 43,000 units in 2023. Combined with rising global interest rates and geopolitical uncertainties, the government determined that bold action was needed to revive market activity and maintain Hong Kong’s competitive edge against regional rivals like Singapore and Shanghai.

The Three “Spicy Taxes” That Are Now History

In his 2024-25 Budget speech delivered on February 28, 2024, Financial Secretary Paul Chan announced the complete abolition of three property-related stamp duties that had been in place for over a decade:

• Special Stamp Duty (SSD): Previously imposed on residential properties resold within specified holding periods (up to 20% for properties sold within 6 months)
• Buyer’s Stamp Duty (BSD): Previously imposed at 15% on non-Hong Kong permanent residents purchasing residential properties
• New Residential Stamp Duty (NRSD): Previously imposed at 15% on Hong Kong permanent residents purchasing additional residential properties beyond their first

These measures, collectively known as “spicy taxes,” were originally introduced during Hong Kong’s property boom years to cool speculation and manage demand. Their complete removal marks a fundamental shift toward a more liberalized property market.

Current Stamp Duty Rates: What You Actually Pay Now

Stock Transfer Stamp Duty (Effective November 17, 2023)

Hong Kong reduced its stock transfer stamp duty to enhance the competitiveness of its stock market. The current rates are:

Ad Valorem Stamp Duty (AVD) Scale 2 Rates (Effective February 28, 2024)

With the abolition of SSD, BSD, and NRSD, all residential property transactions are now subject only to AVD at Scale 2 rates. The government further enhanced this system on February 26, 2025, by raising the maximum property value eligible for the HK$100 flat rate from HK$3 million to HK$4 million.

Important Notes: Stamp duty is calculated based on the higher of the stated consideration or market value of the property. Marginal relief applies when consideration falls marginally above the lower bound of each rate band. The government estimates that approximately 15% of property transactions benefit from the February 2025 adjustment raising the HK$100 threshold to HK$4 million.

Real-World Impact: Who Benefits and How Much?

The stamp duty reforms create dramatically different financial outcomes for various buyer categories. Here’s how the changes affect different types of transactions:

Key Beneficiary Groups

• Foreign and Non-Permanent Resident Buyers: Previously facing an additional 15% BSD, these buyers now enjoy the same tax treatment as local buyers
• Hong Kong Permanent Residents Purchasing Additional Properties: Investors and those upgrading or acquiring second homes are no longer penalized with 15% NRSD
• Property Investors and Flippers: The abolition of SSD removes substantial tax penalties (previously up to 20%) on properties sold within short holding periods
• First-Time and Lower-Value Property Buyers: The increased HK$100 flat rate threshold to HK$4 million provides meaningful savings for those purchasing smaller units
• Active Stock Traders and Institutional Investors: The 23% reduction in stock transfer stamp duty directly reduces transaction costs and improves return profiles

Compliance Essentials: What You Must Know

Despite the rate reductions and exemptions, fundamental compliance requirements remain unchanged. Failure to adhere to these rules can result in significant penalties.

1. Timing is Critical: Property sale and purchase agreements must be stamped within 30 days of execution. Stock transfer instruments must be stamped before registration.
2. Calculation Basis: Stamp duty is calculated on the higher of consideration or market value. Don’t assume you can under-declare the price to save on duty.
3. Electronic Stamping: Use the Inland Revenue Department’s e-Stamping system for convenience and efficiency. It’s available 24/7 and provides instant stamping certificates.
4. Penalty Awareness: Unstamped or insufficiently stamped instruments are not admissible as evidence in civil proceedings. Late stamping incurs penalty charges in addition to the duty payable.
5. Professional Guidance: For complex transactions or if you’re unsure about your obligations, consult a qualified tax professional or legal advisor.

Regional Competitiveness: How Hong Kong Stacks Up

Hong Kong’s stamp duty reforms should be viewed in the context of regional competition for investment capital. Here’s how the city compares with key financial centers:

The November 2023 reduction brings Hong Kong back in line with Singapore for stock transfers and makes it more competitive with mainland China exchanges. For property transactions, the abolition of additional duties significantly improves Hong Kong’s attractiveness compared to Singapore, which maintains substantial Additional Buyer’s Stamp Duty rates of up to 60% for foreign buyers.

Hong Kong’s stamp duty reforms represent a decisive shift toward a more liberalized and competitive economic framework. By removing barriers to investment and reducing transaction costs, the government has positioned the city for renewed growth while acknowledging the need to adapt to changing market conditions. Whether you’re a foreign investor eyeing Hong Kong property, a local resident considering a second home, or an active stock trader, these changes offer tangible benefits and greater flexibility. However, as with any significant policy shift, ongoing monitoring and professional guidance remain essential to navigate this new landscape successfully and ensure compliance with all applicable requirements.