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IRD clarifies its view on stamp duty intra-group transfer relief after John Wiley case
The recent decision in John Wiley of the Court of Final Appeal (CFA) held that the transfer of a Hong Kong stock from a UK limited liability partnership (UK LLP), as a 100% indirect owned subsidiary of a US limited liability company (US LLC), to the US LLC did not qualify for the stamp duty intra-group transfer relief under section 45 of the Stamp Duty Ordinance (SDO).
The decision was primarily based on the fact that the UK LLP did not have “issued share capital” and therefore the US LLC and the UK LLP could not satisfy the “90% association” via “issued share capital” requirement of section 45 of the SDO.
Upon enquiry, the Inland Revenue Department (IRD) has indicated that an LLP or a company that does not have issued share capital can however be the parent entity that holds a company with “issued share capital” for the stamp duty intra-group transfer relief.
Clients who are contemplating a transaction involving the issues discussed in this alert should contact their tax executive.