The 2017 Amendments
The 2017 Amendments resulted in agreements for the sale of stock or shares becoming chargeable as "conveyances on sale", which meant that the relevant duty point for the sale was effectively the time of the execution of the agreement, rather than at the execution of the instrument of transfer on completion of the transaction.
The 2017 Amendments also addressed and aligned the imposition of stamp duties payable on both direct and indirect acquisitions and disposals of residential properties, and introduced an additional conveyance duty (ACD), which applies to acquisitions and disposals of equity interests in property holding entities where certain conditions are met.
Remission of stamp duty on agreements for sale of stock or shares not subject to ACD
The Remission Rules apply to agreements for the sale of stock or shares (or any interest in stock or shares) that are not subject to ACD. This has the effect of returning the relevant duty point for a sale of stock or shares not subject to ACD to the time of execution of the share transfer instrument, instead of the time of execution of the agreement.
Book-entry securities
The Remission Rules also remove duty payable on transactions involving the sale of book-entry securities (i.e., shares in a listed company, including scripless shares that are subject to ACD) where no transfer instrument is executed.
Remission of stamp duty on aborted agreements for the sale of equity interests in an entity
Under the Remission Rules, stamp duty and ACD in excess of SGD 50 will be remitted where an agreement for the sale of equity interests in an entity, executed on or after 11 March 2017, is rescinded or annulled as long as the purchaser did not procure the rescission or annulment with a view to facilitating the disposition of the equity interests by the seller to another person.
The remittance of stamp duty is conditional upon the provision of such evidence of the rescission or annulment as may be required by the Commissioner of Stamp Duties within six months of the date of the rescission or annulment, or such longer period as the commissioner may consider reasonable, and the surrender for cancellation of the agreement.
Conclusion
The 2017 Amendments caused confusion and uncertainty for investors in Singapore as stamp duty was payable regardless of whether a transaction ultimately completed, and it was not clear whether it would be possible to obtain a refund of such stamp duty. There were also instances where the payment of stamp duty at signing caused a protracted negotiation process as some parties were insistent that the payment of the stamp duty, to the company secretary, should be a condition precedent to the signing of the agreement. This insistence reflected fears that there would be a delay in receipt of funds by the company secretary, which would prevent payment of the stamp duty /stamping of the document taking place, within the requisite timeframe, resulting in the seller being subject to a fine and a possible delay in completion. In this respect, the Remission Rules are a welcome development.
This client alert is co-written by Reed Smith Pte Ltd and Resource Law LLC who together form the Reed Smith Resource Law Alliance in Singapore. Reed Smith Pte Ltd is licensed to operate as a foreign law practice in Singapore. Where advice on Singapore law is required, we will refer the matter to and work with licensed Singapore law practices where necessary.
Client Alert 2018-118
