Stamp duty

Stamp duty is a form of financial transaction tax (FTT), typically paid by the buyer at the time of purchase. It can vary in rate and application depending on the jurisdiction. For example, in Singapore, SGX (Singapore Exchange) charges a stamp duty of 0.2% on the purchase of shares. Similarly, Taiwan applies a stamp duty of 0.3% on stock transactions. Hong Kong also enforces a stamp duty on stock trades, with a rate of 0.1% on the value of each transaction.Some other Asian markets have different stamp duty structures, but they all share the common goal of generating revenue for their governments. While the tax is generally small, it increases transaction costs, which can affect traders’ strategies and the cost-effectiveness of trades.

The term "stamp duty" originates from the historical practice of affixing a physical stamp to legal documents to signify that the tax had been paid. This practice dates back to the British Empire, where the government required a stamp on documents like share certificates or property transfer deeds. Over time, this terminology has been adopted in various countries, often in relation to the purchase of financial securities.