Stamp duty

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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.

Cheque method of payment

A cheque, or check, is a document that orders a bank to pay a specific amount of money from a person's account to the person in whose name the cheque has been issued. The person writing the cheque, known as the drawer, has a transaction banking account where their money is held. The drawer writes the various details including the monetary amount, date, and a payee on the cheque, and signs it, ordering their bank, known as the drawee, to pay that person or company the amount of money stated.

Revenue stamp A revenue stamp, tax stamp, duty stamp or fiscal stamp is a (usually) adhesive label used to collect taxes or fees.

A revenue stamp, tax stamp, duty stamp or fiscal stamp is a (usually) adhesive label used to collect taxes or fees on documents, tobacco, alcoholic drinks, drugs and medicines, playing cards, hunting licenses, firearm registration, and many other things. Typically businesses purchase the stamps from the government, and attach them to taxed items as part of putting the items on sale, or in the case of documents, as part of filling out the form.

Impressed duty stamp

An impressed duty stamp is a form of revenue stamp created by impressing (embossing) a stamp onto a document using a metal die to show that the required duty (tax) had been paid. The stamps have been used to collect a wide variety of taxes and duties, including stamp duty and duties on alcohol, financial transactions, receipts, cheques and court fees. Usage has been worldwide but particularly heavy in the United Kingdom and British Commonwealth.


The duty is thought to have originated in Venice in 1604, being introduced (or re-invented) in Spain in the 1610s, the Netherlands in the 1620s, [1] France in 1651, [1] Denmark in 1657,[ citation needed ] Prussia in 1682[ citation needed ] and England in 1694. [1]


A Stamp Duty revenue stamp of Tasmania from 1892. One shilling stamp duty revenue stamp of Tasmania.JPG
A Stamp Duty revenue stamp of Tasmania from 1892.

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. Stamp duty laws can differ significantly between all 8 jurisdictions. The rates of stamp duty also differ between the jurisdictions (typically up to 5.5%) as do the nature of instruments and transactions subject to duty. Some jurisdictions no longer require a physical document to attract what is now often referred to as "transaction duty".

States and territories of Australia first-level subdivision of Australia

The states and territories are the first-level administrative divisions of the Commonwealth of Australia. They are the second level of government in Australia, located between the federal and local government tiers.

Major forms of duty include transfer duty on the sale of land (both freehold and leasehold), buildings, fixtures, plant and equipment, intangible business assets (such as goodwill and intellectual property) debts and other types of dutiable property. Another key type of duty is Landholder duty, which is imposed on the acquisition of shares in a company or units in a trust that holds land above a certain value threshold.

Goodwill (accounting) accounting

Goodwill in accounting is an intangible asset that arises when a buyer acquires an existing business. Goodwill represents assets that are not separately identifiable. Goodwill does not include identifiable assets that are capable of being separated or divided from the entity and sold, transferred, licensed, rented, or exchanged, either individually or together with a related contract, identifiable asset, or liability regardless of whether the entity intends to do so. Goodwill also does not include contractual or other legal rights regardless of whether those are transferable or separable from the entity or other rights and obligations. Examples of identifiable assets that are not goodwill include a company’s brand name, customer relationships, artistic intangible assets, and any patents or proprietary technology. The goodwill amounts to the excess of the "purchase consideration" over the total value of the assets and liabilities. It is classified as an intangible asset on the balance sheet, since it can neither be seen nor touched. Under US GAAP and IFRS, goodwill is never amortized. Instead, management is responsible for valuing goodwill every year and to determine if an impairment is required. If the fair market value goes below historical cost, an impairment must be recorded to bring it down to its fair market value. However, an increase in the fair market value would not be accounted for in the financial statements. Private companies in the United States, however, may elect to amortize goodwill over a period of ten years or less under an accounting alternative from the Private Company Council of the FASB.

Intellectual property (IP) is a category of property that includes intangible creations of the human intellect. Intellectual property encompasses two types of rights; industrial property rights and copyright. It was not until the 19th century that the term "intellectual property" began to be used, and not until the late 20th century that it became commonplace in the majority of the world.


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.

European Union

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. [2]

European Commission executive institution of the European Union

The European Commission (EC) is an institution of the European Union, responsible for proposing legislation, implementing decisions, upholding the EU treaties and managing the day-to-day business of the EU. Commissioners swear an oath at the European Court of Justice in Luxembourg City, pledging to respect the treaties and to be completely independent in carrying out their duties during their mandate. Unlike in the Council of the European Union, where members are directly and indirectly elected, and the European Parliament, where members are directly elected, the Commissioners are proposed by the Council of the European Union, on the basis of suggestions made by the national governments, and then appointed by the European Council after the approval of the European Parliament.

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. [2] 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:

Indirect tax tax collected by an intermediary

An indirect tax is a tax collected by an intermediary from the person who bears the ultimate economic burden of the tax. The intermediary later files a tax return and forwards the tax proceeds to government with the return. In this sense, the term indirect tax is contrasted with a direct tax, which is collected directly by government from the persons on whom it is imposed. Some commentators have argued that "a direct tax is one that cannot be charged by the taxpayer to someone else, whereas an indirect tax can be."

Indirect taxes are also entirely prohibited on the issue of certain securities and debentures. [2]

Hong Kong

Historic Hong Kong stamp duty revenue stamp and overembossing die (1905). Actual stamps are no longer used Hong Kong overembossing die mark on revenue stamp.jpg
Historic Hong Kong stamp duty revenue stamp and overembossing die (1905). Actual stamps are no longer used

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:

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. [3]

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:

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.

The government regularly updates its Stamp Duty laws and in addition to the above, several other amendments have now been published which are also aimed at cooling the property market. Third party calculators make it easier to understand the complex set of rules, making it easier to under the latest cost of buying or selling.


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 formerly a graduated progressive tax with more expensive the house bought the greater the stamp duty rate. The top rate slowly increased from 0.5% in 1882 to 3% in 1947, 5% in 1973, 6% in 1975, reaching its peak at 9% in 1997. [4] The budget of 2008 inaugurated a series of rate reductions. After 2011 the stamp duty tax is set at 1% for residential properties up to €1 million and 2% on the remaining amount. Non-residential real property, building, insurance policies, the intangible business property goodwill are taxed at 2%. A lease for property of any type is taxed according to the lease duration, 1% of the average annual rent, or the market rate whichever is greater, if 35 years or less, 6% up to 100 years, and 12% for a lease of more than 100 years duration. Counterparts (duplicate copies) of documents are taxed the lesser of €12.50 or the duty on the original document. The value of property for stamp duty excludes VAT. Gifts are taxed at market value. [5] Several exemptions including those for gifts between close relatives and first time home buyers expired in 2010. [6] The transfer of stocks and marketable securities is taxed at 1% if over €1,000 or if a gift. Stock warrants in bearer form are taxed at 3% of the value of the shares, and the issue of (new) bearer warrants was prohibited effective 1 June 2015. [7]


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. [8] Oo Applicable rates and more information can be obtained from Inland Revenue Authority of Singapore. Legislation covering Singapore Stamp Duties are found in the Stamp Duties Act. [9]


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.

United Kingdom

The "Stamp Duty Paid" mark that appeared on British cheques from 1956 to 1971. There is now no duty on British cheques. Stamp Duty Paid mark for British cheques from 1956.jpg
The "Stamp Duty Paid" mark that appeared on British cheques from 1956 to 1971. There is now no duty on British cheques.

"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. [11] "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 Land Tax. For first-time buyers purchasing a property under £250,000, Stamp Duty Land Tax was abolished for the next two years. This measure was offset by a rise from 4% to 5% in Stamp Duty Land Tax on residential properties costing more than £1 million. [12]

Further reforms were announced in December 2014, so that rates are now paid only on the part of the property price within each tax band. [13]

In the 2015 Autumn Statement the Chancellor announced that buyers of second homes (whether Buy to let or holiday homes) would pay an additional 3% with effect from April 2016.

The Budget 2017 abolished Stamp Duty for first-time home buyers in England and Wales purchasing homes up to £300,000, saving first-time buyers up to £5,000. Additionally first-time buyers spending up to £500,000 will only pay Stamp Duty @ 5% on the amount in excess of £300,000. Those spending over £500,000 will pay full Stamp Duty. [14]

Government defines first-time buyers as '. . . an individual or individuals who have never owned an interest in a residential property in the United Kingdom or anywhere else in the world and who intends to occupy the property as their main residence.'

Stamp Duty Land Tax only applies throughout England and Northern Ireland. In Scotland, SDLT was replaced by Land and Buildings Transaction Tax on April 1st 2015 [15] . In Wales, Land Transaction Tax was introduced in May 2018. [16] [17]

United States

Although the federal government formerly imposed various documentary stamp taxes on deeds, notes, insurance premiums [18] 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.


Indian laws require stamp duty payments on limited category of transaction documents. Broadly, documents affecting rights and title to property require stamp duty to be paid. Central government requires stamp duty to be paid on a few classes of transaction documents, primarily focussed on securities, under the Indian Stamp Act, 1899 [19] . It is the state government under various state laws that charge stamp duty on many transactions. For example, Maharashtra state's stamp duty law is governed by The Maharashtra Stamp Act, 1958 (Bombay Act LX of 1958 ) [20] . The rates and documents for which stamp duty is required varies across different states in India.

See also

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A Tobin tax was originally defined as a tax on all spot conversions of one currency into another. It was suggested by James Tobin, an economist who won the Nobel Memorial Prize in Economic Sciences. Tobin's tax was originally intended to penalize short-term financial round-trip excursions into another currency. By the late 1990s, however, the term Tobin tax was being incorrectly used to apply to all forms of short term transaction taxation, whether across currencies or not. Another term for these broader tax schemes is Robin Hood tax, due to tax revenues from the speculator funding general revenue. More exact terms, however, apply to different scopes of tax.

A property tax or millage rate is an ad valorem tax on the value of a property, usually levied on real estate. The tax is levied by the governing authority of the jurisdiction in which the property is located. This can be a national government, a federated state, a county or geographical region or a municipality. Multiple jurisdictions may tax the same property. This tax can be contrasted to a rent tax which is based on rental income or imputed rent, and a land value tax, which is a levy on the value of land, excluding the value of buildings and other improvements.

A capital gains tax (CGT) is a tax on capital gains, the profit realized on the sale of a non-inventory asset that was greater than the amount realized on the sale. The most common capital gains are realized from the sale of stocks, bonds, precious metals, and property. Not all countries implement a capital gains tax and most have different rates of taxation for individuals and corporations.

An ad valorem tax is a tax whose amount is based on the value of a transaction or of property. It is typically imposed at the time of a transaction, as in the case of a sales tax or value-added tax (VAT). An ad valorem tax may also be imposed annually, as in the case of a real or personal property tax, or in connection with another significant event. In some countries a stamp duty is imposed as an ad valorem tax.

CREST is a UK-based central securities depository that holds UK equities and UK gilts, as well as Irish equities and other international securities.

Stamp duty in the United Kingdom

Stamp duty in the United Kingdom is a form of tax charged on legal instruments, and historically required a physical stamp to be attached to or impressed upon the document in question. The more modern versions of the tax no longer require a physical stamp.

A transfer tax is a tax on the passing of title to property from one person to another.

Demat account number is quoted for all transactions to enable electronic settlements of trades to take place. Every shareholder will have a Dematerialized account for the purpose of transacting.

Estate Duty Ordinance

The Estate Duty Ordinance is one of Hong Kong ordinances. It regulates the HK estate duty which was a tax imposed on capital asset - the net value of property situated in Hong Kong at the date of the taxpayer's death. It is chargeable irrespective of whether the deceased was a resident of Hong Kong.

SDO s45 Transfer between associated bodies corporate is section 45 of Hong Kong Stamp Duty Ordinance Cap.117. It regulates the Hong Kong Stamp Duty exemption for certain property transfer between associated corporations,.

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Finance Act 2003

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Securities Transaction Tax (STT) is a tax payable in India on the value of securities transacted through a recognized stock exchange. As of 2016, it is 0.1% for delivery based equity trading. The tax is not applicable on off-market transactions or on commodity or currency transactions. The original tax rate was set at 0.125% for a delivery-based equity transaction and 0.025% on an intra-day transaction. The rate was set at 0.017% on all Futures and Options transactions. STT was originally introduced in 2004 by the then Finance Minister, P. Chidambaram to stop tax avoidance of capital gains tax. The government reduced this tax in the 2013 budget after a lot of protests for years by the brokers and the trading community. The revised STT for delivery-based equity trading is 0.1% on the turnover. For Futures, the tax has been reduced to 0.01% on the sell-side only. For Equity Options, the STT has been reduced to 0.05% on the sell side of the premium amount. The rest of the tax structure remains as is. Securities transaction tax is a direct tax. Securities Transaction Tax is levied and collected by the union government of India. STT can be paid by the seller or the purchaser depending on the transaction. The Securities Contract (Regulation) Act, 1956 defines Securities the transaction of which are taxable under STT. Provisions are given in the Security Transaction Tax sub-head that appears under the list of Acts on the Income Tax Website.

Land and Buildings Transaction Tax

Land and Buildings Transaction Tax (LBTT) is a property tax in Scotland. It replaced the Stamp Duty Land Tax from 1 April 2015.

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  1. 1 2 3 Dagnall, H. (1994) Creating a Good Impression: three hundred years of The Stamp Office and stamp duties. London: HMSO, p. 100. ISBN   0116414189
  2. 1 2 3 "Capital Duty Directive Text, Cases and Materials", by Salvador Trinxet Llorca, ISBN   978-0-9567766-6-2
  3. "Hong Kong e-Legislation".
  4. "Former Rates of Stamp Duty". Irish Tax and Customs. Retrieved 22 January 2016.
  5. "Property other than stocks and marketable securities and policies of (life and non-life) insurance". Irish Tax and Customs. Retrieved 22 January 2016.
  6. "Exemptions and Reliefs from the charge to Stamp Duty". Irish Tax and Customs.
  7. "Shares, Stocks and Marketable Securities". Irish Tax and Customs. Retrieved 23 January 2016.
  8. "Stamp duty payment duration and related penalty in case of failure". 3ecpa_Singapore. Retrieved 27 February 2015.
  9. Stamp Duties Act( Cap. 312 )
  10. Taxes and stamp duty. Cheque and Credit Clearing Company, 2012. Retrieved 26 June 2013. Archived here.
  11. "HMRC Stamp Taxes Manual" (PDF). p. 8,11.
  12. Jones, Rupert (24 March 2010). "Budget 2010: stamp duty boost for first-time buyers". The Guardian . Retrieved 25 August 2011.
  13. "Stamp Duty Land Tax".
  18. "Insurance stamp tax". The Independent. 14 December 1914. Retrieved 24 July 2012.
  19. "The Indian Stamp Act, 1899". Retrieved 14 April 2019.
  20. "The Maharashtra Stamp Act, 1958" (PDF). As amended upto 15 January 2018. Retrieved 14 April 2019.Check date values in: |date= (help)

Further reading