Articles: Buyer's Stamp Duty

Questions on Teamway (1239) and a bit of soccer
An HKEX decision last week led us to discover an inflated acquisition that looks like a cash extraction exercise, possibly to cover an earlier outlay of "earnest money". A sudden surge in profits of the acquired consultancy coincides with a Chinese takeover of troubled soccer team A.C. Milan, or Rossonori, which prints more red ink than black, and a deeply-subordinated loan to its Chairman. (22-Oct-2017)
Skyway (1141) sells 2 Lincoln Road to CSPT (0139)CSPT announcement
Company announcement, 28-Nov-2016
CSPT owns 15.48% of Skyway and is paying with bonds convertible into 11.11% of CSPT, while Skyway owns 13.56% of CSPT, so this potentially increases the cross-holding. The sale values the property at HK$406m. They are selling the BVI company that indirectly owns the property, thereby avoiding all stamp duties. Skyway only acquired this company on 4-Mar-2016, so if it had bought and sold the property, the sale would have attracted 15% Special Stamp Duty, 15% Stamp Duty and 15% Buyer's Stamp Duty, a total of 45%, if anyone was mad enough to transact on those terms.
"Foreigners Piling into HK Homes"
Bloomberg, 20-Oct-2016
Fact check: the 250 who paid the 15% Buyer's Stamp Duty (not being Permanent Residents of HK) accounted for only 3.2% of 7826 purchases in September, and an untold number of sales, so we don't even know if they were net buyers. 96.8% of buyers were Permanent Residents.
Skyway Securities (1141) buys 2 Lincoln Road from Central Wealth Financial (0572) at HK$403mCWF announcement
Company announcement, 4-Mar-2016
Skyway is buying the BVI shell that owns the house via a HK subsidiary, avoiding 23.5% or $94.7m in Buyer's Stamp Duty (15%) and Double Stamp Duty (8.5%). CWF completed the purchase of the HK subsidiary on 30-Nov-2015. CWF reveals that the ultimate vendor then is a substantial shareholder of Skyway and an Executive Director of Skyway is sister of that person. So that person must be Lam Hoi Sze, brother of Lin Yuehe, Chairman of Skyway since 1-Mar-2016. CWF will become a 9.31% shareholder of Skyway.
China For You (0572) buys 19 Cumberland Road, Kowloon
Company announcement, 2-Feb-2016
CFY is actually buying a HK company for HK$117m, which owns the property with a mortgage of up to HK$117m. The property is valued at $240m. The vendor, Eternal Vantage Investment Ltd, is owned by a "merchant" whose name is not disclosed, but she is the niece of the vendor in another acquisition announced on 17-Aug-2015. Eternal Vantage obtained a loan facility of HK$200m from Skyway Securities (1141) on 19-Nov-2015. Transferring the company avoids 23.5% in Buyer's Stamp Duty and Double Stamp Duty on the house. Instead they pay 0.2% on the value of the shares.
Nuns in the property habit
The Sisters of Saint Paul of Chartres will pay HK$390m for a vacant Kowloon residential site opposite their private hospital. The site changed hands in January for just $298m, and half of it was acquired in 2010-11 for $76.4m. We trace the history of the site. (20-Nov-2015)
China For You (0572) buys 2 Lincoln Road at HK$400m gross
Company announcement, 17-Aug-2015
The property is valued at HK$400m but they are buying the HK company that owns it, Metro Victor, with bank debt of $190m, for HK$210m net, of which $80m is in cash and the rest is a 2% 2-year note. The corporate transfer saves 23.5% in Buyer's Stamp Duty (15%) and Double Stamp Duty (8.5%) that anyone but a permanent resident without a home would pay. Instead they will pay 0.2% on the HK shares, or HK$380k. Metro Victor was owned by Hang Fat Ginseng (0911) until 2-Apr-2012, before its IPO. The sale then valued the property at HK$237m.
Realord (1196) buys Cyberport house from co-founders of Moiselle (0130) for HK$225m
Company announcement, 10-Apr-2015
Actually it is buying the HK company which owns the property, so the stamp duty will be 0.2% rather than 15% Buyer's Stamp Duty and 8.5% Double Stamp Duty, a saving of 23.2%.
Kong Yunming v Director of Social Welfare
HK Court of Final Appeal, 17-Dec-2013
A landmark case on Articles 25, 36 and 145 of the Basic Law. As Justice Bokhary notes: "It will be noticed at once that these guarantees of equality are not confined to permanent residents. Article 25...speaks of all residents...". This ruling thus has implications for the proposed Buyer's Stamp Duty and Double Stamp Duty, which both discriminate against non-Permanent Residents. It adds support to our view that the proposed duties are unconstitutional.
Webb on 'Backchat" re the proposed stamp duties
RTHK, 29-Nov-2013
The proposed laws on Buyer's Stamp Duty, higher rate and longer period of Seller's Stamp Duty, and Double Stamp Duty are still in LegCo Bills Committees. The show discusses whether they should be withdrawn.
K C Chan is satisfied - are you?
The Minister says they have achieved their goal, whatever that is. Apparently freezing up the market is a Good Thing. 15% Buyer's Stamp Duty and 8.5% Double Stamp Duty are still not law and will not be payable if the law is not passed. We urge readers to write to the LegCo bills committees to demand that they veto the proposals. (28-Jun-2013)
BSD and SSD 2.0 - submission to LegCo Bills Committee on Stamp Duty (Amendment) Bill 2012
We dissect the proposed Buyer's Stamp Duty and increase and expansion of Special Stamp Duty on residential properties in HK. Government replies to Webb-site reveal that they don't actually have data to support the discrimination between Permanent Residents and Non-PRs, even if the duty were constitutional, which it is not. (5-Feb-2013)
Some-Buyer's Stamp Duty
We examine HK's proposed discriminatory stamp duty on companies and non-permanent residents who buy residential property, its questionable constitutionality, its negative impacts on social harmony and the redevelopment market, and the proposed SSD 2.0. (30-Oct-2012)

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