Second Reading Speech By Mrs Lim Hwee Hua, Minister of State for Transport and Finance, on The Stamp Duties (Amendment No.2) Bill 2005, at The Parliament, 21 Nov 200521 Nov 2005
Mr Speaker, Sir, I beg to move, "That the Bill be now read a second time".
2. The Bill will amend the Stamp Duties Act to give legislative effect to the following measures:
a) To extend relief from ad valorem stamp duties on restructuring and merger of companies to business trusts;
b) To require companies amalgamating under the new section 215 of the Companies Act to pay ad valorem stamp duties
c) To repeal seller's stamp duty; and
d) To extend stamp duties exemption to transfers of foreign stocks by way of gift.
3. Sir, I shall now explain the amendments in the Bill.
Relief from ad valorem stamp duties for restructuring and merger exercises
4. Currently, relief from ad valorem duties on restructuring and merger exercises is granted to companies that meet the qualifying conditions under Section 15 of the Stamp Duties Act. The Business Trusts Act came into effect in Oct 2004. Business trusts are essentially another form of business vehicle like companies, and are subject to the same income tax rules. To ensure consistency in tax treatment, this relief provided under the Stamp Duties Act will be extended to business trusts, if they meet the same qualifying conditions.
Requirement of companies amalgamating under the new section 215 of the Companies Act to pay ad valorem stamp duties
5. Based on the recommendations of the Company Legislation and Regulatory Framework Committee, the Companies Act was amended in 2005 to allow amalgamating companies to have all properties, assets and liabilities vested automatically in the new company without needing to get the court's approval. In such cases, the company avoids paying ad valorem stamp duty which unwittingly makes this form of restructuring more favourable than other types of restructuring. This was not the intent of the amendment to Companies Act, which was to simplify the merger process while being revenue neutral.
6. Hence, a new Section 32C will be added to require companies amalgamating under the new section 215 of the Companies Act to pay ad valorem stamp duties. Companies that meet the qualifying conditions under Section 15 of the Stamp Duties Act would still be eligible for relief from ad valorem stamp duties. Bona fide amalgamations of companies would qualify for such relief.
To repeal seller's stamp duty
7. The seller's stamp duty chargeable under Sections 22A & 22B on the sale of residential properties within three years of purchase was introduced in 1996 to curb property speculation and to stabilise the property market. It was suspended indefinitely in November 1997 when the property market cooled. In Budget 2003, the abolition of the seller's stamp duty was announced. Clause 3 amends the Stamp Duties Act to repeal Sections 22A and 22B accordingly.
To extend stamp duties exemption to transfers of foreign stocks by way of gift
8. Currently, transfers on sale of foreign stocks not registered in a register kept in Singapore are exempted from stamp duties under the Stamp Duties Act. This exemption is, however, not extended to a transfer of foreign stocks meant as gift. There is no reason to make this distinction as both types of transfers - by way of gift or sale - are disposals of foreign stock. Clause 5 amends the Stamp Duties Act to extend the exemption to transfers of foreign stocks not registered in a register kept in Singapore by way of a gift.
9. Mr. Speaker, Sir, I beg to move.