Public Consultations

MOF ACCEPTS THREE OF FIVE SUGGESTIONS RECEIVED ON THE DRAFT STAMP DUTIES (AMENDMENT) BILL 2011

1. The Ministry of Finance accepts 3 of the 5 suggestions received during a public consultation exercise from 3 to 23 August 2011 on the draft Stamp Duties (Amendment) Bill 2011. The feedback will be incorporated into the revised Stamp Duty (Amendment) Bill 2011 or its subsidiary legislations. The remaining 2 suggestions were not accepted for implementation as they are not consistent with the policy objectives for the proposed legislative changes.

Draft Stamp Duty (Amendment) Bill 2011

2. The draft Stamp Duty (Amendment) Bill 2011 proposed legislation to put into effect stamp duty changes announced in Budget 2011, as well as changes arising from the periodic review of the stamp duty tax system. The main amendments in the draft Stamp Duties (Amendment) Bill 2011 are as follows:

   1. Extension of stamp duty relief to companies that convert to Limited Liability Partnerships to provide flexibility in business restructuring;

   2. Removal of most $2 and $10 nominal and fixed duties to reduce the compliance costs for taxpayers; and

   3. Refinements to stamp duty relief for qualifying mergers and acquisitions (M&As) to align the stamp duty relief for M&As more closely to the grant of income tax allowance for qualifying M&As.

Public Participation in the Consultation Exercise

3. A summary of the 5 comments received on the draft Stamp Duties (Amendment) Bill 2011 and MOF’s responses are as follows:

   1. Refinements to stamp duty relief for qualifying mergers and acquisitions (M&As)

      1. Comment: To clarify if the subsidiary legislation or the Stamp Duties Act will be amended to reflect that the acquiring company must have a Singapore company as its ultimate holding company on the date of acquisition of shares in the target company.

         MOF’s response: Accepted. This condition will be included in the subsidiary legislation.

      2. Comment: To clarify that in the case of a step acquisition, and all acquisitions of ordinary shares of a target company made within a 12-month period can be consolidated, the company should satisfy the condition that it continues to own more than 50% or 75%, as the case may be, of the ordinary shares of the target company at the end of the relevant financial year.

         MOF’s response: Accepted. This condition will be reflected in the subsidiary legislation.

      3. Comment: To clarify in the new subsection 11A of section 15A that the company must still satisfy the condition that it continues to own more than 50% or 75%, as the case may be, of the ordinary shares of the target company, at the end of the relevant basis period or financial year.

         MOF’s response: Not accepted. Arising from a change in the qualifying period, some acquisitions in the original qualifying period may fall outside the revised qualifying period. (For example, a company is granted SD relief in Jan 2011, but elects, at the end of 2011, to have the 12-month period start from June 2011 to May 2012. The SD relief granted in Jan 2011 thus becomes chargeable to duty.) Stamp duty has to be clawed back from these acquisitions. The new subsection 11A provides for payment of ad valorem stamp duty on these acquisitions previously allowed the relief. The acquiring company is required to maintain more than 50% or 75% of the ordinary shares of the target company for 2 years from the date of the qualifying acquisition. This condition would be reflected in the subsidiary legislation.

   2. Removal of most $2 and $10 nominal and fixed duties

      1. Comment: With the Government’s announcement at Budget 2011, an instrument under Rule 33 of the Land Titles Rules, like most instruments that are liable to fixed or nominal duties that are executed on or after 19 Feb 2011, is no longer chargeable with such duties. Hence, it is suggested to delete section 24(2) of the Stamp Duties Act, which makes reference to instruments under Rule 33 of the Land Titles Rules.

         MOF’s response: Not accepted. MOF is retaining section 24(2) of the Stamp Duties Act as this is an enabling provision for the imposition of duty on instrument relating to conveyance or transfer of property. The policy change to remove duty on documents liable to fixed or nominal duties is being effected through the amendment in the Article 3(i) of the First Schedule of the Stamp Duties Act.

   3. Consequential amendments following changes to the Land Titles (Strata) Act

      1. Comment: The proposed section 22(6)(g) of the draft Bill should follow the wordings of section 84A(1), section 84D(2), 84E(3) and 84FA(2) of the Land Titles (Strata) Act.

         MOF’s response: Accepted. The consequential amendment of section 22(6)(g) will be further aligned to the wordings used in section 84A(1), section 84D(2), 84E(3) and 84FA(2) of the Land Titles (Strata) Act.

4. MOF would like to thank all respondents for their suggestions.