On 25 November 2020, the Government announced that the Double Ad Valorem Stamp Duty (“DSD”) rates on non-residential property transactions will be abolished. The non-residential property transactions after 26 November 2020 will be charged under the rates at Scale 2 (1.5% to 4.25% of consideration or value of the property, whichever is the higher).
The abolition of DSD could facilitate corporations to cash out by selling non-residential property to address their financial needs because of the economic downturn. Given the tight housing supply and that residential property prices remain beyond the reach of the average households, the Government has no plan to adjust any of the stamp duty rates concerning residential properties.
Points to Note
We do not expect the policy can stimulate the non-residential property market given the increasing trend of home office arrangement and the lack of tourists under COVID-19.
From tax perspective, we are aware that a significant portion of non-residential property transactions are done via company share transfer instead of direct property transfer. We expect the trend will continue as the Stamp Duty Rate of 0.2% on company transfer remain to be much lower than the rates at Scale 2, even though legal and finance due diligence are needed to protect your interests in company share transfer.
