Loan Agreement Stamp Duty in HK: What You Need to Know

If you are planning to loan money in Hong Kong, you need to be familiar with the stamp duty that comes with it. In this guide, we will discuss everything you need to know about loan agreement stamp duty in Hong Kong.

What is Stamp Duty?

Stamp duty is a tax imposed on certain documents, which includes agreements and statements. In Hong Kong, the government regulates the stamp duty to generate revenue. In the case of loan agreements, stamp duty is levied on the agreement to legalise it.

What is a Loan Agreement?

A loan agreement is a legally binding document that outlines the terms and conditions of a loan between a lender and a borrower. It sets out the amount of money to be lent, the interest rate charged, the repayment terms and any other relevant details.

Who Pays the Stamp Duty?

According to the Stamp Duty Ordinance in Hong Kong, the borrower has to pay stamp duty for loan agreements. The stamp duty is paid within 30 days from the execution of the agreement. Failure to pay within the 30-day period attracts a penalty.

How is Loan Agreement Stamp Duty Calculated?

In Hong Kong, the loan agreement stamp duty is calculated based on the amount being borrowed. The current stamp duty rate is 0.1% of the total amount borrowed. For example, if you are borrowing HKD 500,000, the stamp duty rate is HKD 500.

Are There Any Exemptions?

Yes, there are exemptions to stamp duty for loan agreements in Hong Kong. For instance, if the borrower is a Hong Kong resident and borrows money from an authorised institution or a licensed money lender, the stamp duty is waived. Additionally, if the loan agreement is between associated entities or is part of a corporate group restructuring exercise, the stamp duty may be waived.

Conclusion

Loan agreement stamp duty is a crucial component of any loan transaction. Borrowers in Hong Kong need to be aware of this tax and be prepared to pay it. The stamp duty is calculated at 0.1% of the loan amount and must be paid within 30 days from the date of the agreement execution. However, it is important to note that there are exemptions to the stamp duty for certain categories of borrowers and loans.