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|An aspect of fiscal policy|
Stamp duty is a tax that is levied on documents. Historically, this included the majority of legal documents such as cheques, receipts, military commissions, marriage licences and land transactions. A physical stamp (a revenue stamp) had to be attached to or impressed upon the document to denote that stamp duty had been paid before the document was legally effective. More modern versions of the tax no longer require an actual stamp.
The duty is thought to have originated in Spain, being introduced (or re-invented) in the Netherlands in the 1620s, France in 1651, Denmark in 1657, Prussia in 1682 and England in 1694.
The Australian Federal Government does not levy stamp duty. However, stamp duties are levied by the Australian states on various instruments (written documents) and transactions. The rates of stamp duty vary from state to state, as do the nature of the instruments or transactions subject to duty. Some jurisdictions no longer require a physical document to attract what is now often referred to as "transaction duty".
Major forms of duty include the transfer duty on the sale of land, businesses, shares and other forms of dutiable property; mortgage duty; lease duty and duty on the hire of goods. Rebates or exemptions are available from transfer duty and mortgage duty for those purchasing their first home.
A temporary stamp duty was introduced in 1657 to finance the war with Sweden. It was made permanent in 1660 and remains on the statute book although it has been substantially altered. Most stamp duties were abolished from 1 January 2000 and the present act only provides for stamp duties on insurance policies. Stamp duties on land registration were renamed and transferred to a separate statute but remain essentially the same, i.e. 0.6% on deeds and 1.5% loans secured against real estate.
According to Schedule 1 of Hong Kong Stamp Duty Ordinance Cap.117 (SDO), Stamp duty applies to some legal binding documents as classified into 4 heads:
- Head 1: All sale or lease transactions in Hong Kong immovable property.
- Head 2: The transfer of Hong Kong Stock.
- Head 3: All Hong Kong bearer instruments.
- Head 4: Any duplicates and counterparts of the above documents.
One example is shares of companies which are either incorporated in Hong Kong or listed on the Hong Kong Stock Exchange. Other than the said shares, HK Stock is defined as shares and marketable securities, units in unit trusts, and rights to subscribe for or to be allotted stock. Stamp duty on a conveyance on sale of land is charged at progressive rates ranging from 1.5% to 8.5% of the amount of consideration. The maximum rate of 8.5% applies where the consideration exceeds HK$21,739,130.
In addition, in response to the overheated property market, the Government has proposed in 2010 and 2012 two further types of stamp duties in respect of conveyances on sale of land:
- Head 1AA / 1B: Special Stamp Duty (which applies to residential properties resold within 3 years after purchase)
- Head 1AAB / 1C: Buyer's Stamp Duty (which applies to residential properties purchased by non-Hong Kong Permanent Residents or companies)
The Special Stamp Duty was enacted by the Legislative Council on 29 June 2011 and would take effect from 20 November 2010. An enhanced rate of the Special Stamp Duty and the Buyer's Stamp Duty was enacted by the Legislative Council on 27 February 2014 but would take effect retrospectively from 27 October 2012.
In the Republic of Ireland stamp duties are levied on various items including (but not limited to) credit cards, debit cards, ATM cards, cheques, property transfers, and certain court documents. Stamp duty was originally a progressive tax with more expensive the house bought the greater the stamp duty rate. Until the budget of 2008 when the stamp duty tax was set at 1% for properties brought up to the value of €1 million and 3% on the remaining amount with a certain exception for first time buyers.
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From 1998, stamp duty in Singapore only applies to documents relating to immovable property, stocks and shares. Purchases of Singapore property or shares traded on the Singapore Exchange, are subject to stamp duty. The Inland Revenue Authority of Singapore (IRAS) mandates stamp duty payment within 14 days from signing of the document if done in Singapore and 30 days if the document is signed overseas. Failure in payment within the fixed time entails heavy penalty.
Swedish law applies a stamp duty on property deeds, at 1.5% of the purchase value. In addition, a stamp duty of 2.0% is levied on new mortgage securities ("pantbrev") for properties.
"Stamp Duty Reserve Tax" (SDRT) was introduced on agreements to transfer certain shares and other securities in 1986, albeit with a relief for intermediaries such as market makers and large banks that are members of a qualifying exchange. "Stamp Duty Land Tax" (SDLT), a new transfer tax derived from stamp duty, was introduced for land and property transactions from 1 December 2003. SDLT is not a stamp duty, but a form of self-assessed transfer tax charged on "land transactions".
On 24 March 2010, Chancellor Alistair Darling introduced two significant changes to UK stamp duty. For first-time buyers purchasing a property under £250,000, stamp duty was abolished for the next two years. This measure was offset by a rise from 4% to 5% in stamp duty on properties costing more than £1 million.
Although the federal government formerly imposed various documentary stamp taxes on deeds, notes, insurance premiums and other transactional documents, in modern times such taxes are only imposed by states. Typically when real estate is transferred or sold, a real estate transfer tax will be collected at the time of registration of the deed in the public records. In addition, many states impose a tax on mortgages or other instruments securing loans against real property. This tax, known variously as a mortgage tax, intangibles tax, or documentary stamp tax, is also usually collected at the time of registration of the mortgage or deed of trust with the recording authority.
Stamp duty is approached by the European Commission regarding raising of capital (capital duty). Council Directive 69/335/EEC of 17 July 1969 concerning indirect taxes on the raising of capital stated that transactions subject to capital duty shall only be taxable in the Member State in whose territory the effective centre of management of a capital company is situated at the time when such transactions take place. When the effective centre of management of a capital company is situated in a third country and its registered office is situated in a Member State, transactions subject to capital duty shall be taxable in the Member State where the registered office is situated. When the registered office and the effective centre of management of a capital company are situated in a third country, the supplying of fixed or working capital to a branch situated in a Member State may be taxed in the Member State in whose territory the branch is situated.
The spirit of the Council Directive 2008/7/EC of 12 February 2008 concerning indirect taxes on the raising of capital is that capital duty interferes with the free movement of capital. The Proposal for a Council Directive of 28 September 2011 on a common system of financial transaction tax will amend this Directive 2008/7/EC, but it is not published in the Official Journal. This Directive 2008/7/EC acknowledges that the best solution would be to abolish the duty, but allows those Member States that charged the duty as at 1 January 2006 may continue to do so under strict conditions. With this stamp duty Directive, Member States may not levy indirect tax on the raising of capital to capital companies in:
- contributions of capital;
- loans or services provided as part of contributions of capital;
- registration or other formalities required before commencing business because of the company's legal form;
- alteration of the instruments constituting the company, particularly when involving the conversion into a different type of company, the transfer of centre of effective management or registered office from one Member State to another, a change in the company's objects or the extension of its period of existence;
- restructuring operations.
Indirect taxes are also entirely prohibited on the issue of certain securities and debentures.
- "Stamp Duty on Shares and Its Effect on Share Prices", by Bond, Steve; Hawkins, Mike; Klemm, Alexander, FinanzArchiv: Public Finance Analysis, Volume 61, Number 3, Article (2005)
- Dagnall, H. (1994) Creating a Good Impression: three hundred years of The Stamp Office and stamp duties. London: HMSO, p. 100. ISBN 0116414189
- Hong Kong Stamp Duty Ordinance Cap.117, Schedule 1 Heading
- "Stamp duty payment duration and related penalty in case of failure". 3ecpa_Singapore. Retrieved 27 February 2015.
- Stamp Duties Act (Cap. 312)
- Taxes and stamp duty. Cheque and Credit Clearing Company, 2012. Retrieved 26 June 2013. Archived here.
- "HMRC Stamp Taxes Manual" (PDF). p. 8,11.
- Jones, Rupert (24 March 2010). "Budget 2010: stamp duty boost for first-time buyers". The Guardian. Retrieved 25 August 2011.
- "Insurance stamp tax". The Independent. 14 December 1914. Retrieved 24 July 2012.
- "Capital Duty Directive Text, Cases and Materials", by Salvador Trinxet Llorca, ISBN 978-0-9567766-6-2
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