XN000022-1992-01-29 — Page 8

WEDNESDAY, JANUARY 29, 1992

6

HE POINTED OUT

TO

THAT COUNTER-INFLATIONARY MEASURES TENDED BE BLUNT INSTRUMENTS; AND PROVISION MUST BE CONSIDERED FOR JUSTIFIABLE EXCEPTIONS.

MR YEUNG SAID FOR EXAMPLE, THE MAIN EFFECT OF THE AMENDMENTS MOVED BY MRS MIRIAM LAU WOULD MAKE IT CLEAR THAT THE REQUIREMENT TO PAY STAMP DUTY WOULD NOT APPLY TO AN AGREEMENT FOR SALE UNDER WHICH A PURCHASER TRANSFERRED HIS OR HER INTEREST IN A PROPERTY TO A PARENT, SPOUSE OR CHILD.

HE SAID THESE WERE ACCEPTABLE TO THE GOVERNMENT.

A SIGNIFICANT TECHNICAL AMENDMENT PROPOSED BY MR MOSES CHENG RELATED TO CHARGEABLE AGREEMENTS FOR SALE INVOLVING AN EXCHANGE OR PARTITION OF PROPERTY, IN ADDITION TO A MONETARY CONSIDERATION, MR YEUNG NOTED.

HE SAID

THE GOVERNMENT AGREED THAT, IN THESE CIRCUMSTANCES STAMP DUTY SHOULD ONLY BE PAYABLE ON THE MONETARY CONSIDERATION INVOLVED.

RELIEF

FROM

THE MOST IMPORTANT OF MR CHENG'S PROPOSED AMENDMENT WAS THE STRENGTHENING OF THE PROVISIONS OF THE BILL RELATING TO STAMP DUTY, MR YEUNG SAID.

"THE BILL ALREADY EXPRESSLY PROVIDED FOR EXEMPTION IN CASES INVOLVING DEFECTS IN TITLE.

"TO DRAFT INTO THE LEGISLATION TOO WIDE AN EXEMPTION COULD CREATE A MAJOR AVOIDANCE LOOPHOLE BUT WE ACCEPT, ON BALANCE, THAT GENUINE CASES OF HARDSHIP NOT EXPRESSLY PROVIDED FOR IN THE LAW COULD ARISE.

**

"ACCORDINGLY, THE REVISED CLAUSE 9 WOULD NOW ALLOW THE GOVERNOR OR HIS DELEGATE TO REMIT OR REFUND ANY STAMP DUTY PAID OR PAYABLE UNDER THE ORDINANCE. THE CIRCUMSTANCES UNDER WHICH THIS DISCRETION TO REMIT OR REFUND STAMP DUTY MIGHT BE EXERCISED WILL BE SPELLED OUT IN A PRACTICE NOTE TO BE ISSUED BY THE COMMISSIONER OF INLAND REVENUE, MR YEUNG SAID.

*

ON THE AMENDMENTS PROPOSED BY MR MARVIN CHEUNG WHICH WOULD HAVE THE EFFECT OF EXCISING FROM THE BILL THE PROVISIONS RELATING то LAND-HOLDING COMPANIES, MR YEUNG SAID THE ORIGINAL INTENTION OF THESE PROVISIONS WAS TO CLOSE AN EXISTING AVOIDANCE LOOPHOLE.

THE

"THIS LOOPHOLE IS EXPLOITED WHEN A PERSON SETS UP A COMPANY, MAIN OR ONLY ASSET OF WHICH IS IMMOVABLE PROPERTY, AND THEN TRANSFERS PART OR ALL OF HIS INTEREST IN THAT PROPERTY BY SELLING HIS COMPANY'S SHARES.

"THESE TRANSACTIONS NOW ATTRACT STAMP DUTY AT THE CONTRACT NOTE RATE, WHICH IS MUCH LOWER THAN THAT PAYABLE ON PROPERTY CONVEYANCE.

"TO DISCOURAGE THIS FORM OF TAX AVOIDANCE, THE BILL ORIGINALLY FIXED THE STAMP DUTY TO BE PAID ON THE SALE OR PURCHASE OF SUCH SHARES AT THE HIGHER, CONVEYANCING RATE, MR YEUNG SAID.

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/HE SAID