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Tax Cut Planned For HK Securities, Derivatives

by Mary Swire, Lowtax.net, Hong Kong
10 June, 2014

Hong Kong plans to cut by ten percent the levy payable on any trading in securities and futures/options contracts, through the Securities & Futures (Levy) (Amendment) Order 2014, which was gazetted on June 6.

The Financial Services and the Treasury Bureau (FSTB) said that the reduction will benefit the general investing public and the financial industry, as, based on an estimated average daily turnover of HKD65bn (USD8.4bn) and a daily turnover of 270,000 futures/options contracts, it would reduce the cost of transactions by about HKD105m per year.

"Our proposal has taken into account the need for the Securities and Futures Commission (SFC) to maintain a healthy financial position on the one hand, and the benefit that the reduction will bring to the general investing public and the financial industry on the other," said an FSTB spokesman.

Under the Order, the levy payable by a securities transaction buyer or seller will fall from 0.003 percent to 0.0027 percent, while that for a futures contract transaction will fall from HKD0.6 to HKD0.54.

The levy payable in respect of a transaction for a Mini-Hang Seng Index Futures Contract, a Mini-Hang Seng Index Options Contract, a Mini-Hang Seng China Enterprises Index Futures Contract, a stock futures contract, or an option for such a contract, will fall from HKD0.12 to HKD0.108.

The SFC previously effected a levy reduction of 20 percent in December 2006, and a further cut of 25 percent in October 2010.

The order will be tabled in the Legislative Council for negative vetting on June 11, and would take effect from November 1, 2014.

A comprehensive report in our Intelligence Report series giving a country-by-country analysis of offshore investment funds, stock exchanges and trusts, with an analysis of the US QI regime, is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report9.asp

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