On 14 October 2026, the Stamp Duty (Amendment) (No. 3) Bill 2026 moved to its second reading at the Legislative Council. If passed, it will lower the association threshold for intra-group stamp duty relief from 90% to 75% and expand eligible entity types. The change applies retroactively to instruments signed on or after 25 February 2026.

For corporate groups that transfer Hong Kong immovable property or stock between subsidiaries, this is one of the more material stamp duty changes in recent years. Here is a plain-English breakdown of what changes, who benefits, and what to watch out for.

The Current Rule vs the New Rule

Section 45 of the Stamp Duty Ordinance currently allows stamp duty relief on transfers of immovable property or Hong Kong stock between "associated bodies corporate." To be associated, one entity must hold at least 90% of the issued share capital of the other, or a third entity must hold at least 90% of both.

The Bill changes the test in two ways:

• Threshold drops from 90% to 75%. Groups with 75–90% ownership, which previously did not qualify, will now be eligible.
• Association can be proven through beneficial interest or voting rights, not only issued share capital. This opens the door for entities without share capital.

The 75% threshold puts Hong Kong roughly in line with Singapore and the UK, which is the stated policy goal.

Entities Without Share Capital Now Qualify

Here's the bigger structural change. The current law only recognises "issued share capital," so entities that do not issue shares were locked out of the relief entirely.

The Bill introduces the concept of "ownership interest" — defined as an interest that carries rights to profits, capital, or reserves and is accounted for as equity under applicable accounting principles. This means:

• Limited liability partnerships (LLPs)
• Companies limited by guarantee
• Other bodies corporate with separate legal personality but no share capital

can now qualify for intra-group relief, provided the 75% associating interest test is met. For fund management structures, professional practices, and non-profit subsidiaries using these vehicles, this removes a major restructuring friction point.

How the Clawback Rule Changes

The existing anti-avoidance clawback remains — if the transferor and transferee cease to be associated within two years of the transfer, the relief is withdrawn and stamp duty becomes payable within 30 days.

What changes is the trigger. The current rule focuses on a change in the percentage of the transferee's issued share capital held by the transferor or a third body corporate. The new rule focuses on a change in the direct or indirect beneficial interest or voting rights in the transferee.

Pay attention to this detail. Under the old drafting, if an intermediate parent (transferor) was wound up within two years, the clawback technically did not trigger because the transferee's issued share capital hadn't changed. Under the new wording, a literal reading is less clear. Professional firms including Deloitte and KPMG have flagged this as an area where IRD guidance would be helpful.

Transitional Arrangement — You Can File Now

The IRD has already set up a transitional mechanism. If you signed an instrument on or after 25 February 2026 and it would meet the relaxed criteria, you can submit an adjudication application to the Stamp Office without paying stamp duty upfront.

The Stamp Office will hold these applications and formally adjudicate them once the Amendment Ordinance is enacted. If you have already paid stamp duty on a transaction that would now qualify, check with the Stamp Office — the IRD has not yet stated a formal refund process for already-stamped instruments.

What to Do Next

If your group is planning or mid-way through a restructuring that involves Hong Kong property or stock transfers, here are the action items:

• Re-check ownership percentages. Any structure at 75% or above that previously did not meet the 90% bar should be re-evaluated.
• Look at non-share-capital entities. If you use LLPs or guarantee companies in your group structure, assess whether they can now be brought into the relief.
• Review pending transfers. If you have transactions between 25 Feb 2026 and now, consider filing for adjudication under the transitional arrangement.
• Document the two-year holding period. The clawback still applies. Make sure your group structure plan keeps entities associated for at least 24 months post-transfer.

Common mistake: assuming that because the threshold dropped to 75%, any transfer above 75% automatically qualifies. The anti-avoidance provisions, clawback, and notification obligations still apply. Each transaction needs to be assessed against the final legislation.

Legislative progress: first reading and second reading debate began on 14 October 2026. Passage is expected within the current legislative session, but the exact timeline depends on LegCo proceedings.

Need help assessing whether your group restructuring qualifies under the enhanced section 45 relief? Contact Lemon Accountancy at info@lcpa.com.cn or call 00852-55749538. Our Hong Kong tax team can review your structure and advise on eligibility and filing strategy.

Disclaimer: This article is for general information only and does not constitute legal or tax advice. The Stamp Duty (Amendment) (No. 3) Bill 2026 is still under legislative consideration and the final provisions may differ. Readers should seek professional advice tailored to their specific circumstances before making any decisions.