Sessional_Paper_1929 — Page 189

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HONG KONG.

REPORT OF THE STAMP DUTIES COMMITTEE.

No. 1929

10

The

1. The appointment of this Committee was first suggested on the 14th March, 1929, but the Committee was not fully constituted until the 1st May. The appointment of the Committee was notified in the press on the 14th May, but through a mistake, the terms of reference had been stated too widely, and they had to be reconsidered. new terms of reference were notified in the press on the 18th May. Immediately after this the chairman was called away from the Colony, and the first meeting of the Committee was not held until the 4th June. Thereafter, the Committee met weekly, more frequent meetings being found impracticable, partly because of the necessity of preparing material for the meetings. The Committee adjourned on the 9th July for the preparation and circulation of the report. The final meeting was held on the 30th July, 1929. These facts are mentioned because otherwise it might appear that undue delay had occurred.

2. The revised terms of reference were as follows:-

"To consider the amendment of the Stamp Ordinance with a view to prevent- ing evasion of the stamp duty on share transactions and of the estate duty on shares forming part of the estates of deceased persons".

The Committee took the first part of the reference to mean, "with a view to the protec- tion of the revenue derived from stamp duties on share transactions', because there is no legal obligation to execute a fresh transfer instrument on each transaction, and accordingly failure to do so cannot properly be called evasion.

3. The First Appendix to this report contains a note of the main proposals which were considered by the Committee. The Committee recommends the adoption of the first and second proposals in the First Appendix. Draft sections to carry out these two proposals are annexed to the Appendix as Annexes A and B.

4. The Hon. Mr. J. P. Braga signed the report under reservation. An explana- tory memorandum by him is contained in the Second Appendix to this report.

5. The Third Appendix to this report contains a minority report by Mr. J. Scott Harston, who, however, signed the main report.

6. The Committee hopes that the two proposals recommended, if adopted, will have an appreciable effect in preventing evasion of estate duty in respect of shares. The first proposal, which may be referred to as the dividends proposal, should tend to encourage the registration of transfers at the time of each declaration of a dividend, and the second proposal should make it easier for the Estate Duty Commissioner to

to ascertain whether shares standing in the name of a deceased are part of his estate or not. The second proposal also embodies a provision which is auxiliary to the first proposal, as it makes a deceased's estate liable for contraventions of the dividends section.

7. The Committee recognises that these two proposals fail in certain respects. The first proposal does nothing to encourage registration except at dividend time, and accordingly it will have little or no effect during the period between dividends, or in the case of companies which are not paying dividends. In the latter case, however, business will probably be small. The second proposal will assist the Estate Duty Commissioner considerably where the shares are registered in the name of the deceased, but it will not help the Commissioner to discover shares beneficially belonging to the deceased which are not registered in his name.