Stamp duty is a tax on legal documents or publications, with different rates and rules in various countries. The United States does not have stamp duty due to the negative reaction to the Stamp Act of 1765, which helped lead to the American Revolution. In the UK, stamp duty is levied on the purchase, rental, or transfer of ownership of land or property, while in Australia, it is collected by the states and imposed on various transactions.
In finance, a stamp duty is a tax that is levied on certain legal documents or publications. The tax got its name because the payment is usually certified by attaching or marking the document with an official seal. In some areas, the duty is an ad valorem tax, or a flat-rate charge that is not tied to the value of a purchase. In other regions, or on specific items, the tax may be based on a percentage of the value of the item in question.
There is no stamp duty in the United States, probably due to the unpopular reaction of the colonies to the Stamp Act of 1765. This act required that all legal documents in the colonies be printed on government-issued stamped paper. The taxes collected would be spent on maintaining a protective military presence in the colonies. Reaction to the bill was negative, mainly because the tax, which only applied to the colonies, was passed by a Parliament in which they were denied representation. The Stamp Act became a unifying issue between disparate groups and helped lead to the American Revolution.
Stamp duty is a common tax in many other parts of the world. In the UK, a Stamp Duty Land Tax (SDLT) is levied on the purchase, rental or other forms of transfer of ownership of land or property. The amount of the duty is usually a percentage of the value above a certain threshold. The tax is generally not charged on land inherited or property transferred as part of a divorce decree. Payment is made by filing an SDLT statement with HM Revenue and Customs within 30 days of completion of the transaction.
A Stamp Duty Reserve Tax (SDRV) is applied to the purchase of shares and securities through the stock exchange, a stockbroker, or a third party such as a bank. The amount due is based on a percentage of the amount paid for the share, not its value. If a person receives shares for free, he is not required to pay the fee; If you receive shares at a discount rate, tax is only calculated on their cost, not on the actual value of the collateral.
In Australia, stamp duty is collected by the states and not the federal government. It is generally imposed on rental agreements, life insurance policies, and title transfers resulting from gifts, insurance policies, mortgage loans, or the sale of real estate, vehicles, and commercial property. First-time homebuyers are exempt from the tax if the price of their home is below a certain threshold. For subsequent purchases, the tax applies to both the home and the mortgage. Revenues collected through this outlet are used to fund education, healthcare, law enforcement, and public safety.
In the UK, stamp duty is levied on buyers. Japan levies the tax on sellers, and France charges both parties. India requires that all legal documents be printed on stamp paper, and only those items executed in this way can be produced in court as evidence. Canada, like the United States, does not charge a stamp duty.
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