Proposed Expansion of Intra-group Stamp Duty Relief in Hong Kong

In the 2026-27 Budget, the Financial Secretary announced that an amendment bill will be introduced this year to facilitate internal restructuring by enterprises. A key proposal is to relax the eligibility criteria for stamp duty relief on intra‑group transfers, expanding the scope of eligible entities and lowering the ownership threshold for association under section 45 of the Stamp Duty Ordinance (Cap.117) (the Ordinance). The proposal directly addresses structural limitations highlighted by the Court of Final Appeal (CFA) in John Wiley & Sons UK2 LLP and Wiley International LLC v The Collector of Stamp Revenue [2025] HKCFA 11, as discussed in our previous article.

 

BACKGROUND

Intra‑group relief under the Stamp Duty Ordinance

Section 45 of the Ordinance provides stamp duty relief for transfers of Hong Kong stock or immovable property between “associated bodies corporate”. Under the existing regime, two bodies corporate are regarded as “associated” only if: (i) one body corporate is the beneficial owner of not less than 90% of the issued share capital of the other; or (ii) a third body corporate is the common beneficial owner of not less than 90% of the issued share capital of both bodies corporate.

The John Wiley decision

In John Wiley & Sons UK2 LLP and Wiley International LLC v The Collector of Stamp Revenue [2025] HKCFA 11, the CFA considered whether a limited liability partnership (LLP) could qualify as an “associated body corporate” for the purposes of section 45 of the Ordinance.

The CFA ultimately held that the term “issued share capital” must be given its ordinary and natural meaning in the company law context and should not be interpretated broadly to include interests akin to shares. As a result, the transfer in question did not qualify for intra‑group relief.

The decision clarified the scope of the existing legislation but, more importantly, also exposed the limitations of a relief regime framed primarily by reference to share capital‑based corporate structures.

Budget 2026-27: proposed expansion of intra‑group relief

Against this backdrop, and to address this growing issue, the Financial Secretary announced in the Budget two preliminary proposed measures:

1. Expansion of eligible entities
   The scope of business entities eligible for intra‑group relief will be expanded to include bodies corporate that do not issue or allot share capital, such as limited liability partnerships (LLPs) with separate legal personality.
   
   
2. Lowering the association threshold
   The minimum threshold for association between the transferor and transferee will be reduced from 90% to 75%.

Subject to the enactment of the relevant amendment ordinance, a body corporate will be deemed to have an associating interest in another body corporate if:

• it has at least 75% of direct or indirect beneficial interest in the other body corporate; or
• it is entitled to exercise, or control the exercise of, at least 75% of the voting rights in the other body corporate.

Beneficial interest will be determined by reference to:

• the percentage of issued share capital of the other body corporate held; or
• the body corporate’s ownership interest in the other body corporate, as applicable.

The enhanced intra‑group relief regime is intended to apply to relevant instruments executed on or after 25 February 2026.

Transitional and procedural arrangements

Importantly, before the enactment of the amendment ordinance, duty payers may submit adjudication requests for instruments relating to transfers that satisfy the conditions under the enhanced intra‑group relief regime.

In such cases:

• the Stamp Office will consider the application after the enactment of the relevant legislation; and
• duty payers are not required to pay stamp duty upfront and then apply for a refund, which reduces cash‑flow and administrative burdens during the transitional period.

 

KEY TAKEAWAY

The introduction of the amendment bill marks an important development in aligning Hong Kong’s stamp duty relief regime with modern business realities to ensure that commercially driven internal restructurings will not be subject to stamp duty purely based on the legal form of the involved entitles, thereby supporting greater flexibility and efficiency for businesses. The lowering of the association threshold from 90% to 75% is also a welcomed move, enhancing the competitiveness of Hong Kong's stamp duty relief regime.

While the final scope will depend on the enacted legislation, the Budget proposals signal a clear policy intention to remove technical barriers to intra‑group restructuring and to position Hong Kong’s stamp duty relief regime as a more competitive and business‑friendly framework.

We will continue to monitor legislative developments and provide updates as the amendment ordinance progresses.