How to Accurately File Stamp Duty Returns for Hong Kong Stock Transactions

Key Facts: Hong Kong Stock Transaction Stamp Duty

Current Rate: 0.2% total (0.1% on bought note + 0.1% on sold note)
Filing Deadline: Within 2 days if executed in Hong Kong; 30 days if executed outside Hong Kong
Late Penalty: Up to 10 times the original duty; reduced penalty formula: 14% × Duty × Days Delayed / 365
E-Stamping Available: Yes, since December 16, 2019 for stock transactions
Bulk Filing: Up to 5,000 instruments per submission
Payment Methods: Online (Visa, MasterCard, JCB, UnionPay, PPS, FPS) or offline (Hong Kong Post, Stamp Office)

Understanding Hong Kong Stock Transaction Stamp Duty

Stamp duty is a critical component of Hong Kong’s tax framework for securities transactions. Any transfer of Hong Kong stock—defined as stock whose transfer must be registered in Hong Kong SAR—triggers stamp duty obligations. Whether you’re a broker, exchange participant, or individual investor, understanding the filing procedures is essential for compliance and avoiding costly penalties.

What Constitutes a Stampable Stock Transaction?

Stamp duty applies to transfers of Hong Kong stock by way of sale and purchase. The duty is calculated on the higher of:

The actual consideration (purchase price) paid for the shares
The market value of the shares at the time of transfer

Important Note: For shares traded on the Hong Kong Stock Exchange (SEHK), the IRD uses the closing price on the last trading day before the transfer as the benchmark value. For private companies, the IRD generally adopts the Net Asset Value (NAV) shown in the latest audited accounts.

Stamp Duty Rates and Calculation

Current Stamp Duty Structure

Transaction Type	Rate	Basis
Bought Note	0.1%	Consideration or market value (whichever is higher)
Sold Note	0.1%	Consideration or market value (whichever is higher)
Total Duty	0.2%	Reduced from 0.26% on November 17, 2023
Instrument of Transfer	HKD 5.00	Fixed fee per instrument
Gift Transfers (no consideration)	HKD 5.00	Fixed fee (no contract note required)

Currency Conversion Requirements

Stamp duty must be shown and imprinted on the contract note in Hong Kong dollars, even if the Hong Kong stocks are denominated in a currency other than HKD (e.g., RMB or USD). This ensures investors know the exact amount of stamp duty paid in Hong Kong dollars to the Stamp Office.

Conversion Rule: If the consideration is in a currency other than HKD, it must be converted into Hong Kong dollars using the rate of exchange determined by the Hong Kong Monetary Authority on the transaction date.

Required Documentation for Stamp Duty Filing

Essential Documents

To successfully file stamp duty returns for stock transactions, you must prepare the following documentation:

1. Contract Notes

Required for all sale and purchase transactions
Must be executed (prepared and signed) by both transferor and transferee
Must show stamp duty in Hong Kong dollars
Both bought note and sold note are required
Not required for gift transfers (use Instrument of Transfer only)

2. Instrument of Transfer

Required for all share transfers, including gifts
Must be properly executed by transferor and transferee
Contains details of the shares being transferred
Subject to HKD 5.00 fixed stamp duty

3. Financial Statements (for unlisted shares)

Latest audited accounts: Must be within 6 months of the transfer date
Management accounts: Required if audited accounts are more than 6 months old; must be within 3 months of transfer date
Used to determine Net Asset Value (NAV) for stamp duty assessment
Certified copies acceptable for e-Stamping

4. Supporting Documents

Share purchase agreement (optional but recommended)
Application letter to the Inland Revenue Department (for counter submissions)
Company incorporation documents (if required for valuation)
Board resolutions approving the transfer

Filing Deadlines and Time Limits

Critical Deadlines by Transaction Type

Document Type	Execution Location	Stamping Deadline
Contract Note (Sale/Purchase)	Hong Kong	Within 2 days of completion
Contract Note (Sale/Purchase)	Outside Hong Kong	Within 30 days of completion
Instrument of Transfer	Hong Kong	Prior to execution or immediately after
Instrument of Transfer	Outside Hong Kong	Within 30 days post-execution
Exchange Participants (on behalf of clients)	N/A	By 11 a.m. on settlement date (T+2)

Important: Exchange participants must pay stamp duty on behalf of their clients by 11 a.m. on the settlement date, which is the second trading day (T+2) following the transaction date. This is a critical compliance requirement for brokers and financial intermediaries.

Step-by-Step Filing Procedures

Method 1: E-Stamping (Recommended)

Since December 16, 2019, the Inland Revenue Department has expanded e-Stamping services to cover instruments related to stock transactions. This is the fastest and most convenient method for stamping contract notes and instruments of transfer.

Step 1: Prepare Your Documents

Gather all required documents (contract notes, instrument of transfer, financial statements)
Ensure all documents are properly executed with signatures
Verify the accuracy of transaction details and amounts
Convert foreign currency amounts to HKD if applicable

Step 2: Access the E-Stamping Portal

Visit the IRD e-Stamping portal at www.ird.gov.hk
Create an E-Stamp Account if you haven’t already (use Form IRSD109 for non-HK registered entities)
Each organization can have up to 20 E-Stamp Accounts across main office and branches
Login with your unique account number and password

Step 3: Submit Your Application

Select the appropriate instrument type (contract note or instrument of transfer)
Complete the online application form with transaction details
For bulk submissions: Upload up to 5,000 instruments at once
Upload supporting documents (financial statements for unlisted shares)
Review all information for accuracy before submission

Step 4: Calculate and Pay Stamp Duty

The system will automatically calculate the stamp duty payable
Choose your payment method:
- Online Payment: Visa, MasterCard, JCB, UnionPay, PPS, or FPS (instant stamp certificate)
- Offline Payment: Print payment notice and pay at any Hong Kong Post office or Stamp Office (certificate within 2 working days)
Complete the payment transaction

Step 5: Receive Your Stamp Certificate

Online payment: Stamp certificate issued instantly upon receipt of payment
Offline payment: Certificate issued within 2 working days after payment received
Download and save the stamp certificate for your records
Stamp certificates have the same legal status as conventional stamps

Method 2: Counter Stamping at Stamp Office

For transactions that cannot be processed via e-Stamping, you must submit documents in person at the Stamp Office.

When Counter Stamping is Required:

Share transfers involving derivatives or share swaps
Transactions where indebtedness is part of the consideration
Consideration subject to adjustment or contingent consideration
Unlisted company shares with different classes of shares
Complex transactions requiring IRD review

Counter Stamping Procedure:

Bring the original documents (contract notes, instrument of transfer)
Complete a stamping request form (available at Stamp Office or download from IRD website)
Provide all supporting documents (financial statements, board resolutions, etc.)
Submit documents at the Stamp Office Counter
Pay the stamp duty at the counter (cash, cheque, or electronic payment)
Receive either a stamped document or stamp certificate
Processing time varies depending on complexity; simple cases may be processed same day

Bulk Filing for Multiple Transactions

For entities processing high volumes of share transfers, the e-Stamping system offers significant efficiency advantages:

Maximum submission: 5,000 instruments per batch
Single payment: Settle stamp duty for all instruments with one payment
Eligibility: Available for share transfers with not more than 4 joint transferors and/or 4 joint transferees
Processing time: Instant certificate issuance for online payments
Risk reduction: Minimizes risk of losing or damaging original instruments

Persons Liable for Stamp Duty Payment

Understanding who is responsible for paying stamp duty is crucial for compliance. The liability hierarchy is as follows:

Priority	Party Liable	Circumstances
Primary	Agent (Broker/Exchange Participant)	When an agent is involved in the transaction
Secondary	Principal (Buyer/Seller)	When no agent is involved; the party affecting the sale or purchase
Joint & Several	Both Transferor and Transferee	Both parties are jointly and severally liable
Additional	Any Person Using Unstamped Document	If a chargeable instrument is not duly stamped, any person using it becomes liable

Important Note: Exchange participants bear primary responsibility for paying stamp duty on behalf of their clients by 11 a.m. on the settlement date (T+2). This duty cannot be delegated, and failure to comply may result in regulatory sanctions in addition to stamp duty penalties.

Penalties for Late Stamping and Non-Compliance

Penalty Structure

Hong Kong’s stamp duty regime imposes significant penalties for late stamping to encourage timely compliance. Understanding the penalty structure is essential for managing compliance risks.

Scenario	Penalty Calculation	Minimum Penalty
Voluntary Disclosure (Non-Deliberate Delay)	14% × Stamp Duty × Days Delayed / 365	HKD 500
Discovered During Inspection	Higher penalty; reduced penalty formula does not apply	Subject to Collector’s discretion
Maximum Statutory Penalty	Up to 10 times the original stamp duty payable	N/A

Reduced Penalty Formula Explained

For voluntary disclosure cases where the delay is not deliberate, the Collector of Stamp Revenue will normally adopt the following reduced penalty formula:

Reduced Penalty = 14% × Stamp Duty Payable × Number of Days Delayed / 365 days

Minimum penalty: HKD 500

Example Calculation:

Scenario: A share transfer with stamp duty of HKD 10,000 was filed 60 days late (voluntary disclosure, non-deliberate delay)

Calculation:
Reduced Penalty = 14% × HKD 10,000 × 60 / 365
= HKD 1,400 × 0.164
= HKD 230

Actual Penalty: HKD 500 (the minimum penalty applies since HKD 230 is below the HKD 500 minimum)

Penalty Remission

The Collector of Stamp Revenue has discretion to remit penalties wholly or partially depending on the circumstances of each case. To request penalty remission:

Submit a written request to the Stamp Office explaining the circumstances
Provide supporting evidence for any extenuating circumstances
Demonstrate that the delay was not deliberate or due to gross negligence
The penalty remission may be adjusted upward or downward depending on special circumstances

Warning: The reduced penalty formula does not apply to late stamping cases uncovered during Stamp Office inspections. In such cases, significantly higher penalties may be imposed, potentially approaching the maximum statutory penalty of 10 times the original duty.

Legal Consequences of Unstamped Documents

Beyond financial penalties, failure to properly stamp documents carries serious legal implications:

Inadmissible Evidence: Instruments not duly stamped cannot be received in evidence in any legal proceedings
Share Registration: The acquirer’s name cannot be entered in the Company’s Register of Members until stamping is completed
Extended Liability: Any person who uses an unstamped chargeable instrument becomes liable for the stamp duty and penalty
Regulatory Consequences: Exchange participants may face regulatory sanctions from the Securities and Futures Commission (SFC)

Special Circumstances and Exemptions

Stock Borrowing and Lending Transactions

Transfer of shares under stock borrowing and lending transactions may be exempted from stamp duty. To qualify for relief:

The transaction must meet specific criteria outlined in the Stamp Duty Ordinance
Refer to the Stamp Office Interpretation and Practice Notes on “Relief for Stock Borrowing and Lending Transactions”
Following a 2025 Court of Final Appeal ruling, relief applies only to bodies corporate with issued share capital
Some structures such as Limited Liability Partnerships (LLPs) and Limited Liability Companies (LLCs) may not qualify

Gift Transfers

When shares are transferred as gifts without any consideration being exchanged:

A contract note is not required
An Instrument of Transfer must still be prepared and executed
A fixed duty of HKD 5.00 is charged
The same stamping deadlines apply (2 days in HK; 30 days outside HK)

Transactions Excluded from E-Stamping

The following transaction types must be stamped at the Stamp Office counter:

Share transfers involving derivatives or share swaps
Transactions where indebtedness is incurred as whole or part of the consideration
Consideration subject to adjustment or contingent consideration
Unlisted companies with different classes of shares
Complex valuation scenarios requiring IRD review

Best Practices for Compliance

For Exchange Participants and Brokers

Implement automated systems: Use technology to track T+2 settlement dates and ensure timely payment by 11 a.m.
Maintain robust recordkeeping: Keep detailed records of all transactions, contract notes, and stamp certificates
Leverage bulk filing: Utilize the e-Stamping system’s bulk submission feature for efficiency
Train staff: Ensure compliance teams understand filing deadlines and procedures
Regular reconciliation: Reconcile stamp duty payments with trading records monthly
Use online payment: Opt for online payment methods to receive instant stamp certificates

For Corporate Finance Teams

Advance preparation: Gather financial statements well before the intended transfer date
Valuation accuracy: For unlisted shares, ensure NAV calculations are current and supportable
Board approval: Obtain necessary board resolutions before executing transfers
Document execution: Ensure all instruments are properly signed before submission
Professional advice: Consult tax advisors for complex transactions or valuation issues
Calendar management: Diarize stamping deadlines to avoid late filing penalties

For Individual Investors

Understand broker responsibilities: For exchange-traded stocks, your broker handles stamp duty payment
Off-market transfers: For private transfers, you are responsible for stamping within required timeframes
Keep documentation: Retain all contract notes, transfer instruments, and stamp certificates
Verify stamping: Confirm that instruments are properly stamped before completing share registration
Timely action: Don’t delay stamping; penalties accrue daily

Common Pitfalls and How to Avoid Them

Common Mistake	How to Avoid
Missing the 2-day deadline for HK-executed instruments	Implement automated reminder systems; use e-Stamping for instant processing with online payment
Using outdated financial statements (older than 6 months)	Plan share transfers in advance; prepare management accounts if audited statements are stale
Failing to convert foreign currency to HKD	Always check HKMA exchange rates on transaction date; show stamp duty in HKD on contract notes
Not providing both bought and sold notes	Ensure both parties execute contract notes; verify completeness before submission
Attempting to e-Stamp ineligible transactions	Review e-Stamping exclusions before submission; complex transactions require counter stamping
Inadequate documentation for valuation	Prepare comprehensive supporting documents; include board resolutions, financial statements, and valuation workings
Assuming buyer/seller will handle stamping	Clarify responsibilities in writing; remember both parties are jointly liable
Using unstamped documents in legal proceedings	Verify stamping status before registration or litigation; unstamped documents are inadmissible

Frequently Asked Questions

Q: Can I use e-Stamping for all stock transactions?

A: E-Stamping is available for most straightforward stock transactions since December 16, 2019. However, transactions involving derivatives, share swaps, contingent consideration, indebtedness as consideration, or unlisted companies with multiple share classes must be stamped at the Stamp Office counter.

Q: What if the consideration is below market value?

A: Stamp duty is calculated on the higher of the consideration paid or the market value of the shares. The IRD will assess stamp duty based on the market value if it exceeds the stated consideration. For SEHK-listed stocks, this is the closing price on the last trading day before transfer; for private companies, it’s typically the NAV from the latest audited accounts.

Q: How long does it take to receive a stamp certificate via e-Stamping?

A: If you pay online via credit card, debit card, PPS, or FPS, the stamp certificate is issued instantly upon receipt of payment. If you choose offline payment (at Hong Kong Post or Stamp Office), the certificate is issued within 2 working days after payment is received.

Q: Who pays stamp duty in a share transfer?

A: Both the transferor and transferee are jointly and severally liable for stamp duty. However, when an agent (broker) is involved, the agent typically bears primary responsibility. For exchange-traded stocks, exchange participants must pay stamp duty on behalf of clients by 11 a.m. on the T+2 settlement date.

Q: Can penalties be waived or reduced?

A: Yes, the Collector of Stamp Revenue has discretion to remit penalties wholly or partially. For voluntary disclosures where the delay was not deliberate, a reduced penalty formula applies (14% × Duty × Days / 365, minimum HKD 500). You can submit a written request with supporting evidence explaining extenuating circumstances. However, this reduced formula does not apply to cases discovered during Stamp Office inspections.

Q: What happens if I register shares without stamping the transfer documents?

A: Technically, the acquirer’s name should not be entered in the Company’s Register of Members until stamping is completed. If an unstamped instrument is used, the person using it becomes liable for the stamp duty and penalties. Additionally, unstamped instruments are inadmissible as evidence in legal proceedings, which could create significant problems if disputes arise.

Q: Do I need to stamp share transfers if the shares are a gift?

A: Yes, but the requirements are simpler. Gift transfers require an Instrument of Transfer (but not a contract note) and are subject to a fixed duty of HKD 5.00. The same stamping deadlines apply: within 2 days if executed in Hong Kong, or within 30 days if executed outside Hong Kong.

Q: How do I obtain an E-Stamp Account?

A: Hong Kong registered businesses can create E-Stamp Accounts through the IRD portal. Non-Hong Kong entities (not registered under the Business Registration Ordinance) must complete Form IRSD109 to apply. Each organization’s main office and branches can have a maximum of 20 E-Stamp Accounts, each with a unique account number and password.

Resources and Contact Information

Inland Revenue Department Resources

E-Stamping Portal: www.ird.gov.hk/eng/tax/e_stamp.htm
Stamp Duty Main Page: www.ird.gov.hk/eng/tax/sdu.htm
Stamping Procedures (Form IRSD119): Download from IRD website
Share Transfer Stamping Guide (SOG PN04A): Available at IRD website
E-Stamp Account Application (Form IRSD109): For non-HK registered entities
Late Stamping Guidelines (IRSD122): Detailed penalty information

Government Resources

GovHK Stamp Duty: www.gov.hk/en/residents/taxes/stamp
Stamp Duty Rates: www.gov.hk/en/residents/taxes/stamp/stamp_duty_rates.htm
Methods of Stamping: www.gov.hk/en/residents/taxes/stamp/methods_of_stamping.htm

Contact Information

Stamp Office
Inland Revenue Department
Address: 12/F & 13/F, Revenue Tower, 5 Gloucester Road, Wan Chai, Hong Kong
General Enquiries Hotline: (852) 187 8088
Fax: (852) 2519 6740
Email: [email protected]
Office Hours: Monday to Friday, 8:15 a.m. to 12:30 p.m. and 1:30 p.m. to 5:45 p.m.

Key Takeaways

Act Quickly: The 2-day deadline for Hong Kong-executed instruments is strict. Use e-Stamping with online payment for instant stamp certificates to avoid late penalties.
Know Your Liability: Both transferor and transferee are jointly liable for stamp duty. If you’re an exchange participant, you must pay by 11 a.m. on T+2 settlement date on behalf of clients.
Leverage E-Stamping: The e-Stamping system offers instant processing, bulk submission capabilities (up to 5,000 instruments), and reduced administrative burden. Use it whenever your transaction qualifies.
Prepare Documentation: For unlisted shares, ensure you have current financial statements (within 6 months for audited accounts, or within 3 months for management accounts). Incomplete documentation delays processing.
Understand Penalties: Late stamping can cost up to 10 times the original duty. For voluntary disclosures, the reduced penalty formula (14% × Duty × Days / 365, minimum HKD 500) applies, but only if the delay was non-deliberate.
Currency Conversion Matters: Always convert foreign currency consideration to HKD using HKMA rates. Stamp duty must be shown in HKD on contract notes, even for RMB or USD-denominated stocks.
Unstamped Documents Have No Legal Standing: Instruments not duly stamped are inadmissible in legal proceedings and prevent share registration. Don’t risk using unstamped documents.
Consider Professional Advice: For complex transactions involving contingent consideration, multiple share classes, or valuation uncertainties, consult tax professionals to ensure compliance and optimize stamp duty treatment.
Keep Comprehensive Records: Maintain all contract notes, instruments of transfer, stamp certificates, and supporting documents. These records are essential for audits, compliance verification, and dispute resolution.
Voluntary Disclosure Pays: If you discover late stamping, voluntarily disclose to the IRD immediately. The reduced penalty formula is significantly more favorable than penalties for cases discovered during inspections.

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