Hong Kong tax relief changes may extend to LLPs

The plan will keep the city’s tax regime aligned with modern business structures.

Hong Kong’s proposed expansion of stamp duty relief for property and share transfers could extend tax benefits to limited liability partnerships (LLP) after a court ruling excluded them, lawyers said.

Asset managers also stand to gain from the change, given their wide use of LLPs, Machiuanna Chu, a partner and head of the commercial group at Deacons, told Hong Kong Business.

“Statutory bodies and trust structures may also benefit from the expanded relief,” she said in an emailed reply to questions.

The government said in February it would amend Section 45 of the Stamp Duty Ordinance to let entities without ordinary company shares qualify for the incentives.

The proposal follows the June 2025 decision in John Wiley & Sons UK2 LLP and Wiley International LLC v The Collector of Stamp Revenue, where the Court of Final Appeal ruled that the tax perks did not apply to LLPs.

Chu said the case exposed a gap in the framework because ownership tests relied mainly on issued share capital, excluding structures without conventional shares.

She said the ruling prompted calls for reform to keep Hong Kong’s tax regime aligned with modern business structures and keep the city’s competitiveness.

The proposal would also lower the ownership threshold for related companies to qualify for relief from 90% to 75%. The changes are expected to apply retrospectively to transfer instruments executed on or after 25 February.

David Cheng, a corporate partner at Bird & Bird LLP, said the changes could encourage more internal transfers of assets and shares during corporate restructuring exercises.

“Businesses will be able to align their asset and corporate structuring decisions with their commercial goals, rather than be limited by strict tax rules,” he said in an email.

He said some groups might centralise properties and shares under common holding structures, whilst multinational companies, acquisition vehicles, and firms with big property portfolios are likely to benefit most from the revised rules.

Still, Chu said companies would need to show they satisfy the 75% ownership requirement. “Proving that there is 75% ownership may not be a straightforward exercise and may require detailed legal analysis,” she pointed out.

Cheng added that companies must maintain the ownership relationship for at least two years after the transfer to keep the perks. “Otherwise, the stamp duty relief would be withdrawn, and payment would have to be made retroactively,” he added.