Hong Kong to Abolish Capital Duty on 1 June 2012

The Hong Kong Government published in the Gazette on 16 March 2012 the Companies Ordinance (Amendment of Eighth Schedule) Order 2012 to abolish capital duty currently levied on Hong Kong companies that have a share capital under the Companies Ordinance.

The Order is to implement the Financial Secretary’s proposal in the 2012-13 Budget Speech to abolish capital duty levied on local companies.

The Order will be tabled at the Legislative Council for negative vetting on March 21 this year. Subject to the necessary legislative process, the Order will come into operation on 1 June 2012.

The amendments will be applicable to companies which lodge the relevant documents about incorporation, increases in nominal share capital or the issuing of shares at a premium with the Companies Registry on or after 1 June 2012.

In accordance with the prevailing company law, an investor is liable to a capital duty of 0.1% on the amount of authorised capital or on the amount of authorised capital increased for he applies to register a new company or files an application for increase of authorised capital, subject to a cap of HKD30,000. When the Order becomes effective on 1 June 2012, an investor is no longer required to pay that duty.

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