Second Reading Speech By Mrs Lim Hwee Hua Senior Minister Of State For Finance On The Stamp Duties (Amendment) Bill 2008, at The Parliament, 18 Nov 200818 Nov 2008
1. Mr Speaker, Sir, I beg to move, "That the Bill be now read a second time".
2. The Bill proposes 3 changes to the Stamp Duties Act. The first amendment gives legislative effect to a tax change announced earlier in Budget 2007 while the other two amendments are changes resulting from MOF's on-going review of our stamp duty system and rules.
3. A public consultation on the Stamp Duties (Amendment) Bill 2008 was conducted between August and September 2008. The draft Bill has been revised to incorporate the public feedback received accordingly.
4. Sir, let me now explain the main amendments in the Bill.
Amendment for Budget 2007 Announcement
First, extension of Stamp Duty Relief to More Corporate Structures
5. Currently, only transfer of assets between associated companies and registered business trusts qualifies for Section 15 stamp duty relief. As the global business environment evolves, new business vehicles have also been introduced, such as Limited Liability Partnerships.
6. Clause 3 of the Bill amends Section 15 to allow other types of business vehicles to also qualify for relief, as long as the transferor and transferee entities are associated. With the change, more corporate structures - namely unlimited companies, Statutory Boards, and Limited Liability Partnerships (LLPs) where the partners are companies, registered business trusts, Statutory Boards and other qualifying LLPs will now qualify for stamp duty relief.
Second, removal of mandatory adjudication for gifting of shares and property
7. Sir, IRAS currently requires taxpayers to submit a request for mandatory adjudication for transfer of shares and immovable property by way of gift, where the consideration paid for the transfer is nil or significantly below market value. The adjudication process serves as a safeguard against the revenue risk for such gift cases.
8. IRAS has reviewed the process and concluded that current requirement for mandatory adjudication for gift cases is no longer necessary. Firstly, most of the gift cases involve HDB flats, where IRAS can easily ascertain their values through HDB's Valuation Table. Secondly, most property transfers have third-party valuation reports which safeguard against the under-declaration of property values. Lastly, the value of the shares transferred can be computed either based on the audited accounts (for unlisted shares) or traded price (for listed shares), without the need to conduct another valuation in most cases. With the removal of mandatory adjudication, taxpayers can enjoy a faster transfer process and save on the adjudication and valuation fees. To safeguard stamp duty revenue, IRAS will continue to rely on the controls currently in place under the Stamp Duties Act and periodic audit of gift cases to detect stamp duty abuse.
9. Thus, Clause 4 will make it no longer compulsory for taxpayers to go through mandatory adjudication for transfer of shares and immovable property by way of gift.
Third, allowing the Government to set-off the amount of outstanding tax owed to it
10. The Stamp Duties Act will also be amended to allow the Government to set-off tax arrears against monies due to the taxpayer from the Government. As I have already explained this change in my earlier speech for the Property Tax Amendment Bill, I will not go into the details again.
11. Sir, I beg to move.