Former Chief Executive Tung Chee-hwa has been renting luxury houses in the Mid-Levels for many years, but he recently bought them under the name of first home buyers and attracted attention.
In fact, similar examples of celebrity first placements are not uncommon.
In addition to buying flats that have been rented for many years, some people own properties through company ownership and other methods. The public understands that there are differences in first home buyers, and they are also wondering whether they should be exempted from additional stamp duty.
After the government introduced double stamp duty to stop the property market from continuing to excite, it exempted first home buyers from 2013 to allow local permanent residents to meet their home purchase needs.
The current law defines a first home buyer as a "permanent resident who did not hold a residential property in Hong Kong when signing the sale and purchase agreement", but it does not distinguish the actual ability of the first home buyer or whether the family member already owns the property.
The actual effect is that citizens who purchase hundreds of millions of luxury housing units can enjoy a stamp duty of only 4.25% as long as they do not own other properties.
Even like the Secretary of Justice Zheng Ruohua, when he was revealed to have purchased residential units as first home buyers in 2018, he had indirectly controlled multiple residential units in the name of the company.
In addition, the elderly parents, spouses or children of many celebrities and celebrities bought homes or entered the market by transferring company equity.
Tung Chee-hwa has always lived in Jia Hui Garden, and the visit of the treasurer is full of reveries.
(Photo by Yu Ruijing)
The Government's Lazy First Purchase Situation
For the general public, it is not a secret to use the "name rejection" and "name transfer" of the owners to "make their own first-home" status.
According to statistics from real estate agency companies, there were 3,651 transactions registered for internal transfers last year. Although it was down about 21% from the previous year, it still accounted for 7% of the overall transactions.
The focus of the incident should be on how the government treats all first home buyers "equally".
Although tax avoidance tricks are not illegal, the government has the responsibility to improve the system and effectively target investors and multi-property households, so as to achieve the purpose of collecting taxes by those who can pay more.
In response to questions from Legislative Council members in June last year, Financial Secretary Chen Maobo said that the government had paid attention to relevant news and said that buyer stamp duty and double stamp duty accounted for a low percentage of the property market. He noticed that some people made their own first-home buyers, but they still No follow-up.
The government announced a new 15% levy, but in fact there are many loopholes in the levy.
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Two ways to help tax effectively
To levy taxes more effectively without disturbing normal transactions such as general house swaps, officials may find it difficult.
However, for direct families holding multiple properties, the government can amend the law to stipulate that if the owners and spouses have already held residences in various forms, newly purchased residences will not be exempted from the "spicy tax."
In view of the current lack of direct access to the company’s beneficial owner information, the Land Registry is unable to monitor property transactions conducted by way of equity transfers.
Therefore, the company registry, the land registry and the tax bureau should also establish an information exchange system to combat tax avoidance.
Second, the government can collect property stamp duty from all persons who obtain beneficial control of the residence from the transfer of company equity, without exemption.
The Registrar of Companies should require both parties to a share transaction to declare whether the company’s beneficial owner will be changed in the transaction at the same time when reporting the property information held by the company.
The Inland Revenue Department is required to collect buyer's stamp duty and double stamp duty from equity buyers based on the market value of the company's property and the proportion of equity transactions.
Responding to the "lowest global tax rate" cannot be delayed again and again Chen Fan should re-launch the first-hand building vacancy tax stamp duty adjustments must be based on the needs of the public