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HONGKONG LEGISLATIVE COUNCIL
power to remit the duty on exchange contract cancellation notes, if the Col- lector is satisfied that, owing to bank ruptcy or other cause, the banker can- not recover duty from the person liable to pay it. The third change is to make it clear that in the case of genuine cancellation of exchange con- tracts, as distinct from a set-off, the duty is payable only on the original exchange contract, although, for the purposes of a banker's accounts, the cancellation may appear in his books as a second exchange contract. This applies only if the cancellation agreement is come to, and the exchange for the cancel· lation is fixed, and the transaction is com- pleted, on the same day. That is to prevent evasion and to avoid parties to an ex- change contract pretending that a set- off is a genuine cancellation. One of the most important clauses in the Bill is paragraph (c) of clause 6, relating to con- veyances. At present, conveyances under $20,000 pay duty at the rate of 50 cents per thousand and those above at $1 per thousand. It is found that this has led to considerable splitting to avoid the higher scale. It is very hard to prove it but the conclusion is almost irresistible that splitting has occurred. and the proposal is to abolish the lower scale and apply the $1 through. out. Paragraph (1) of the same section alters the heading relating to the duty on transfers of shares. At present duty is calculated on the market value. "Market is not a suitable term for shares value" which has no market value, e.g., shares in private companies. It is proposed to omit the word market in heading 14 (a) in the schedule of the Bill. Another provi- sion secures that if a compradore order is passed through a bank it must pay the same duty as a cheque.
14
THE COLONIAL SECRETARY seconded, and the Bill was rel a first time.
The **
21
· Objects and Reasons state:- 1. The object of this bill is to make in the Stamp Ordinance. 1921, certain amendments which experience has shown to be necessary.
2-Clause 2 supplies a drafting omis. sion, and corrects a drafting error, in section 3 of the principal Ordinance.
3.-Claose amends section 10 of the principal Ordinance so as to throw the onus of proof upon the person who as serts that there has been no splitting in order to evade stamp duty.
LE
4.-Clause 4 deals with exchange con- tracts. The insertion of the words or
33 15 carried out proposed because it might possibly be argued that the present section 22 of the principal Ordinance applies only to cases where something in the nature of cancellation takes place. Paragraphs (b) and (c) of clause 4 are explained in paragraph 10 below. proposed new sub-section (7) of section 22 gives the Collector power to remit the duty on exchange contracts cancellation notes, executed by bankers, if the Collector is satisfied that, owing to bankruptcy
The
or any other cause, the banker cannot recover the duty, or can- not recover all the duty, from the per- son who is liable to pay the duty. The proposed new sub-section (8) provides that in the case of a genuine cancella- tion, as distinguished from a set off, the exchange contract cancellation note duty shall be payable only in respect of the original contract, although for the pur- Poses of the banker's accounts the con- cellation may take the form of a second exchange contract. The conditions of
this concession are that the cancellation agreement must be come to, and the ex- change for the cancellation be fixed, and the transaction be completed, on the same day.
5. Where an adjudication is applied for the Collector has, under section 14 (2) of the principal Ordinance, power to call for an abstract of the instrument and for evidence to show whether the necessary facts have been set out in the
instrument. He has no such power in the case of an instrument which is merely tendered for stamping. Clause 5 proposes to give him this power.
amendments in the schedule to the prin
6.-Clause 6 proposes to make certain
cipal Ordinance. These amendments are explained below.
7. Paragraph (a) is a repetition of a regulation which was made on May 13th. It is inserted here because it seems con- venient to collect in this bill as many as possible of the amendments which have already been made by regulation. Three sets of regulations have already been made under the Ordinance. Some of these regulations are temporary and will not be required after the end of this present year. Others have been worked into this bill, and the intention is to consolidate all the remaining re-
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HONGKONG LEGISLATIVE COUNCIL
Any regula- gulations early next year. tions which are worked into this bill will be repealed as soon as the bill be- comes law.
8. Paragraph (b) corrects a drafting error in Heading No. 12.
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such bonds should pay at the same rate as mortgages up to the maximum of $20. It was necessary to fix this maximum be- cause there is no power to increase stamp duties by regulation. but it seems obvious that such bonds should pay at the same rate whatever the amount. The new -Paragraph (c) proposes to abandon-Heading No. 12 therefore renders such the system of a double scale for convey- bonds liable to the same rate of duty as ances, and to charge $1 per 100 in every mortgages, whatever the amount of the case. There is reason to believe that the existence of a scale has been taken advantage of for the purpose of evading duty, though it is almost impossible in any given case to prove that such eva- sion has been intended.
bond.
16.--The proposed new Heading 144 provides that if compradore orders are passed through a bank they must pay the same duty as cheques. This is only a
revival of the rule which from 1903 to 1921.
new
was
in force
Heading 17A
17. The proposed reproduces a regulation which was made provides for the case of dividend war- on the 13th May, 1921, except that it
rants issued before the 13th May. 1921. This case is not unimportant, because the practice of issuing in coupon form war- rants to receive any dividends that may be declared is sometimes employed by Chinese companies.
10.-Paragraph (d) deals with the question of the liability for stamping exchange contract cancellation notes. The object is to impose the liability on the banks wherever a bank is concern. ed. If neither party to the contract is a banker, the seller will remain liable to put on the stamps, as at present. The lability to see that the stamp duty is paid does not affect the question of the liability for the duty as between the
18. In noting up in the schedule to the parties to the contract: see section 22 Stamp Ordinance. 1921, the amendments (4) of the principal Ordinance, as amend-made by Clause 6 of this bill it will be ed by this bill.
11.-Paragraphs (e), (f) and (g) repro- duce regulations which were made on the
17th June.
12. Paragraph (b) corrects a drafting error in Heading No. 33, sub-heading (7)
13. Paragraph (1) proposes to delete the word .market in the sub-heading relating to the duty on transfer of shares. The reason for this amendment is that the term market value is not very appro- priate to the case of shares in private companies, or even to the case of shares in public companies which in fact have at the time no general market.
14--Paragraph (j) proposes to insert certain headings in the schedule to the principal Ordinance.
י{
It
found that in some cases the sign "Do " will give a wrong meaning unless it is read without reference to the insertions made by this bill. For example, the sign Do" in the fourth column of Heading No. 15 will still refer to the word Overembossed and not to the word Adhesive" and should be altered accordingly to "Overembossed.” might be supposed that these formal alterations ought to have been made by this bill. The reason why this has not been done is that, as it happens, no such alterations are necessary in the official copy of the Ordinance, which is in fools- cap form, and in which the paging of the schedule is different from that in the octavo form of the Ordinances is the octavo form of the Ordinance. The
form in which they appear in the annual 15.-The proposed new Heading No. volur ie. The lines of the sections are 12A. deals with duty on bonds given of the same length in both forms of the under Ordinance No. 16 of 1915. Section Ordinances. The copy of the Ordinance 11 (2). to secure the payment of estate deposited in the Registry of the Supreine duty. In the Stamp Ordinance, 1901. Court is here described as the official such bonds were liable to the same duty copy in reliance on the provisions of as mortgage. The effect of the Stamp Section 10 of the Interpretation Ordi- Ordinance, 1921, was to render them nance, 1911. It would of course have liable to a fixed duty of $20. This was
been better if the sign Do had not
A
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a hardship in the case of small estates. been used in the principal Ordnance at and accordingly by a regulation made all but no difficulty ought to arise in on the 17th June, it was provided that actual practice.
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