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Revised Stamp Duty Relief for Intra-Group Corporate Restructuring
Hong Kong has long been a preferred hub for multinational holding structures. However, as business and investment holding structures continue to evolve, the existing framework governing stamp duty relief for intra-group share transfers has become increasingly restrictive in certain circumstances, particularly where the relevant entities do not have traditional issued share capital.
In the 2026/27 Budget, the Hong Kong Government announced proposed changes to Section 45 of the Stamp Duty Ordinance (Cap. 117) to relax the relief criteria. The updated framework presents corporate groups with a valuable opportunity to restructure their holdings more efficiently while reducing potential stamp duty exposure.
Court Ruling Exposes Legislative Gap
Historically, Section 45 provided stamp duty relief for transfers of Hong Kong stock or immovable property between associated bodies corporate. However, the relief required a 90% association threshold based solely on issued share capital.
These limitations were highlighted by a landmark Court of Final Appeal judgment: John Wiley & Sons UK2 LLP and Wiley International LLC v. The Collector of Stamp Revenue (2025 HKCFA 11). The court confirmed that entities without traditional share capital, such as Limited Liability Partnerships (“LLPs”), were excluded from the relief as they do not possess issued share capital.
The newly proposed enhancements directly address this commercial reality by expanding the definition of association.
Proposed Legislative Changes Effective from 25 February 2026
The proposed legislative amendments introduce three key changes for instruments executed on or after 25 February 2026:
- Reduced Ownership Threshold: The minimum ownership threshold for association between the transferor and transferee is reduced from 90% to 75%.
- Expand the Coverage of Business Entities: The scope of relief is expanded to include bodies corporate that do not issue or allot share capital (e.g., LLPs), provided they possess a separate legal personality.
- Alternative Association Test: Association can now be established if a body corporate has at least a 75% beneficial interest (direct or indirect) OR if it is entitled to exercise or control the exercise of at least 75% of the voting rights in the other body corporate.
These proposed changes enhance the intra-group stamp duty relief framework, making the relief more accessible and flexible for corporate restructuring activities.
Transitional “Hold-Over” Arrangement
During the current transitional period, the Inland Revenue Department (“IRD”) has introduced a favourable administrative arrangement. For instruments executed on or after 25 February 2026 that satisfy the proposed conditions above, the Stamp Office allows duty payers to submit adjudication requests without paying any stamp duty upfront.
The Stamp Office will hold these applications in abeyance and decide whether the relief may be granted after the Stamp Duty (Amendment) Bill 2026 is enacted.
Bill Progressing through Legislative Council
The Stamp Duty (Amendment) Bill 2026 is currently progressing through the legislative process following its publication in the Gazette on 6 March 2026. The Bill completed its First Reading and the commencement of the Second Reading debate in the Legislative Council on 18 March 2026.
While the relief remains subject to final enactment, the IRD’s current administrative position provides corporate groups with the opportunity to proceed with restructuring plans in anticipation of the changes.
How RSM Can Support You
Our team provides end-to-end support for group restructurings, from advising on structures that leverage the new 75% ownership and voting rights tests, to conducting pre-transfer tax health checks.
We also manage the full adjudication process, including the preparation of required application documents to help ensure your group qualifies for the relief while remaining fully compliant with Hong Kong’s tax laws.
