Find Out the Basics Before You Make Your First Foreign Exchange Trade

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Who pays tax in Hong Kong?

There is no stamp duty withheld through Clearstream Banking on securities held in Clearstream Banking. Stamp duty may however be payable on specific transactions. Back to page Print. My Clearstream. Market Taxation Guide - Hong Kong This Market Taxation Guide Hong Kong provides the following details: Reference information about all taxes applied at source, through Clearstream Banking and its local depositories, to securities deposited in Clearstream Banking; and Instructions for obtaining relief at source or a refund of withholding tax, where these are available, through Clearstream Banking.

Important note: This Market Taxation Guide including any attachments and other links is for informational purposes only and is not intended and should not be considered to be legal advice on any subject matter. No No No a. The FTT would cause information to be incorporated more slowly into trades, creating "a greater autocorrelation of returns". This pattern could impede the ability of the market to prevent asset bubbles.

Hong Kong tax rates and allowances:

The deterrence of transactions could "slow the upswing of the asset cycle", but it could also "slow a correction of prices toward their fundamental values". Habermeier and Kirilenko conclude that "The presence of even very small transaction costs makes continuous rebalancing infinitely expensive. Therefore, valuable information can be held back from being incorporated into prices. As a result, prices can deviate from their full information values.

In these cases, the capital market becomes less efficient. Revenues vary according to tax rate, transactions covered, and tax effects on transactions. The Swedish experience with transaction taxes in —91 demonstrates that the net effect on tax revenues can be difficult to estimate and can even be negative due to reduced trading volumes. Revenues from the transaction tax on fixed-income securities were initially expected to amount to 1, million Swedish kronor per year but actually amounted to no more than 80 million Swedish kronor in any year.

Reduced trading volumes also caused a reduction in capital gains tax revenue which entirely offset the transaction tax revenues. An examination of the scale and nature of the various payments and derivatives transactions and the likely elasticity of response led Honohan and Yoder to conclude that attempts to raise a significant percentage of gross domestic product in revenue from a broad-based financial transactions tax are likely to fail both by raising much less revenue than expected and by generating far-reaching changes in economic behavior.

They point out that, although the side effects would include a sizable restructuring of financial sector activity, this would not occur in ways corrective of the particular forms of financial overtrading that were most conspicuous in contributing to the ongoing financial crisis. Accordingly, such taxes likely deliver both less revenue and less efficiency benefits than have sometimes been claimed by some. On the other hand, they observe that such taxes may be less damaging than feared by others. On the other hand, the case of UK stamp duty reserve tax shows that provided exemptions are given to market makers and banks, that FTT can generate modest revenues, at the expense of pensioners and savers.

Despite the tax rate of 0. If implemented on an international scale, revenues may be even considerably higher, since it would make it more difficult for traders to avoid the tax by moving to other locations. According to a European Commission working paper, empirical studies show that the UK stamp duty influences the share prices negatively. More frequently traded shares are stronger affected than low-turnover shares. Therefore, the tax revenue capitalizes at least to some extent in lower current share prices.

  • Stamp Duty Exemptions.
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  • Why Is Hong Kong Considered a Tax Haven?.

For firms which rely on equity as marginal source of finance this may increase capital costs since the issue price of new shares would be lower than without the tax. With a lower capital stock, output would trend downward, reducing government revenues and substantially offsetting the direct gain from the tax.

In the long run, wages would fall, and ordinary workers would end up bearing a significant share of the cost. More broadly, FTTs violate the general public-finance principle that it is inefficient to tax intermediate factors of production, particularly ones that are highly mobile and fluid in their response.

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An IMF Working Paper finds that the FTT "disproportionately burdens" the financial sector and will also impact pension funds, public corporations, international commerce firms, and the public sector, with "multiple layers of tax" creating a "cascading effect". Other studies have suggested that the financial transaction tax is regressive in application—particularly the Stamp Duty in the UK, which includes certain exemptions only available to institutional investors.

  • Hong Kong Tax Rates and Income Tax System.
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One UK study, by the Institute for Development Studies, suggests, "In the long run, a significant proportion of the tax could end up being passed on to consumers. The study concluded, therefore, "The tax is thus likely to fall most heavily on long-term, risk-averse investors. Although James Tobin had said his own Tobin tax idea was unfeasible in practice, a study on its feasibility commissioned by the German government concluded that the tax was feasible even at a limited scale within the European time zone without significant tax evasion.

Stiglitz said, the tax is "much more feasible today" than a few decades ago, when Tobin recanted. In January , feasibility of the tax was supported and clarified by researcher Rodney Schmidt, who noted "it is technically easy to collect a financial tax from exchanges First dealers agree to a trade; then the dealers' banks match the two sides of the trade through an electronic central clearing system; and finally, the two individual financial instruments are transferred simultaneously to a central settlement system.

How Hong Kong’s Stamp Duty Impacts Trading on HKEX

Thus a tax can be collected at the few places where all trades are ultimately cleared or settled. When presented with the problem of speculators shifting operations to offshore tax havens , a representative of a "pro—Tobin tax" NGO argued as follows:. Agreement between nations could help avoid the relocation threat, particularly if the taxes were charged at the site where dealers or banks are physically located or at the sites where payments are settled or 'netted'.

The relocation of Chase Manhattan Bank to an offshore site would be expensive, risky and highly unlikely — particularly to avoid a small tax. Globally, the move towards a centralized trading system means transactions are being tracked by fewer and fewer institutions. Hiding trades is becoming increasingly difficult. Transfers to tax havens like the Cayman Islands could be penalized at double the agreed rate or more.

Citizens of participating countries would also be taxed regardless of where the transaction was carried out. There has been debate as to whether one single nation could unilaterally implement a financial transaction tax. In the year , "eighty per cent of foreign-exchange trading [took] place in just seven cities. Agreement [to implement the tax] by [just three cities,] London, New York and Tokyo alone, would capture 58 per cent of speculative trading.

Over 1, economists including Nobel laureate Paul Krugman , [] Jeffrey Sachs [] and Nobel laureate Joseph Stiglitz [38] , more than 1, parliamentarians from over 30 countries, [] [] the world's major labor leaders, the Association for the Taxation of Financial Transactions and for Citizens' Action , Occupy Wall Street protesters, Oxfam , War on Want [] and other major development groups, the World Wildlife Fund , Greenpeace [] and other major environmental organizations support a FTT.

However, the reality is that a commission of the Vatican of which the Pope is not a member merely said that such a tax would be worth reflecting on. In their opinion FTT would constitute, among other things, a fair political initiative in the current financial crisis and it would represent an EU added value.

Most hedge funds managers fiercely oppose FTT. In , the IMF conducted considerable research that opposes a transaction tax. This is an interesting issue. We will look at it from various angles and consider all proposals. Challenging the IMF's belittling of the financial transaction tax, Stephan Schulmeister of the Austrian Institute of Economic Research found that, "the assertion of the IMF paper, that a financial transaction tax 'is not focused on the core sources of financial instability', does not seem to have a solid foundation in the empirical evidence.

The report indicated that "there is a widely held perception that IMF research is message driven. About half of the authorities held this view, and more than half of the staff indicated that they felt pressure to align their conclusions with IMF policies and positions. A survey published by YouGov suggests that more than four out of five people in the UK, France, Germany, Spain and Italy think the financial sector has a responsibility to help repair the damage caused by the economic crisis.

It found that Europeans "strongly support the various measures that the European Union could adopt to reform the global financial markets A quarter of Europeans are against it, possibly because of the fear that they themselves might be subject to this tax. From Wikipedia, the free encyclopedia. This article is about a tax levied on transactions in the financial sector. Academic Mihir A.

Desai Dhammika Dharmapala James R. Hines Jr. By country. Main article: Currency transaction tax. Main article: Bank transaction tax. Main article: Automated payment transaction tax. Main article: Swedish financial transaction tax. Main article: Stamp duty in the United Kingdom. Main article: Robin Hood tax. Main article: European Union financial transaction tax. Opposing EU countries. Undecided Euro countries. Undecided Non-Euro countries. See also: Reaction to the Tobin Tax. EU Financial transaction tax EU countries pro. EU countries contra. Undecided EU countries.

This section needs to be updated. Please update this article to reflect recent events or newly available information. December Archived from the original on 31 October Retrieved 24 June Stamp Out Poverty report. Stamp Out Poverty Campaign. Archived from the original PDF on 12 June Retrieved 6 March Page, "Foolish Revenge or Shrewd Regulation?

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