Hong Kong's Financial Services and the Treasury Bureau: Stamp duty exemption for proposed listed real estate investment trusts; target is to submit the bill to the Legislative Council in the first half of next year.

On November 6, at the meeting of the Financial Affairs Panel of the Legislative Council, Joseph Chan Ho-lim, Under Secretary for Financial Services and the Treasury of Hong Kong (FSTB), pointed out that in supporting the development of the real estate investment trust (REIT) market, the Hong Kong government has successively implemented a number of measures, such as launching a subsidy scheme to support REITs listed in Hong Kong, and exempting stamp duty on transfers of REIT units since December 2024. The proposal introduced today to waive stamp duty on transfers of non-residential properties by REITs preparing for listing is a measure announced in the 2026-27 Budget. The measure takes into account that REITs may need to carry out asset restructuring before listing, which involves considerable stamp duty expenses. Therefore, the aim is to minimize the upfront costs of REIT listings as much as possible and encourage more new REITs to be established in Hong Kong. Chan Ho-lim introduced that the main contents of the measure are: (1) It applies to new REITs preparing to list in Hong Kong, including REITs already listed overseas that seek dual primary listing or secondary listing in Hong Kong. Beneficiary REITs must be listed on the Stock Exchange of Hong Kong within six months after completing the property transfer. (2) As for the transfer method, whether the property is transferred directly to the REIT or transferred through the transfer of shares in a special purpose investment vehicle, the stamp duty involved may be waived. (3) To avoid affecting the local residential property market, the proposed stamp duty waiver will not apply to transfers of residential properties. (4) To prevent abuse, the REIT must hold the property (or the shares in the special purpose investment vehicle) for at least two years, and must maintain its listing status on the Stock Exchange of Hong Kong for at least two years. (5) To encourage REIT issuers to apply for listing as early as possible, it is proposed that the stamp duty waiver take effect on the day the government submits the bill to the Legislative Council. Until the Legislative Council passes the bill, stamp duty already paid during the period may be refunded if all eligibility requirements are met. Regarding the next steps, Chan Ho-lim said that relevant legislative proposals are currently being formulated, with the target of submitting the bill to the Legislative Council in the first half of 2027. The proposed stamp duty waiver is part of the Hong Kong government's "package" of measures to support the development of the REIT market. At the same time, the government will continue to promote multiple measures, including striving to implement the inclusion of REITs in Stock Connect as soon as possible to inject growth momentum into the market.