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Closing stamp duty rate differential

Closing stamp duty rate differential

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SINGAPORE — From Saturday, all transactions involving the transfer of property from one entity to another will be subject to stamp duties, regardless of whether the transaction is carried out directly between buyer and seller, or through a third party.
On Friday, the Stamp Duties (Amendment) Bill was passed in Parliament to introduce a new Additional Conveyance Duty (ACD) on the indirect buying and selling of residential properties through corporate vehicles. Upcoming new launch condo include Parc Botannia  , Carpmael Thirty Eight and Kandis Residence , Sengkang Central condo while existing ones include Kingsford Waterbay, Seaside Residences and Grandeur Park Residences. Carpmael 38 prices, 38 Carpmael floor plans, Parc Botannia prices and Parc Botannia showflat will be available shortly.
The Ministry of Finance (MOF) said the new measure seeks to address the stamp duty rate differential between direct property transactions and indirect real estate deals conducted through property holding entities (PHEs). PHEs are defined as entities whose primary tangible assets — meaning at least 50 per cent — are in residential properties in Singapore.
Previously, the acquisition of shares in companies was subjected to 0.2 per cent stamp duty based on the purchase price or the value of the shares. There was no stamp duty on the acquisition of equity interest for other types of entities such as partnerships and trusts, or the disposal of equity interest in all types of entities, including companies. This treatment applied even when the entity’s assets mainly comprise residential properties in Singapore.
In comparison, the purchase of residential properties in Singapore attracts Buyer’s Stamp Duty (BSD) of between 1 and 3 per cent, and Additional Buyer’s Stamp Duty (ABSD) of up to 15 per cent based on the purchase price or the value of the properties. The sale of residential properties in Singapore may also be subject to Seller’s Stamp Duty (SSD).
Second Minister for Finance Lawrence Wong told the House: “With the ABSD and SSD remaining relevant in our property market, we have decided it is timely to close this stamp duty rate differential.” Mr Wong had first flagged on Tuesday that the Government would address the loophole in response to a suggestion by Chua Chu Kang GRC MP Yee Chia Hsing.
By subjecting the sale and purchase of equity interest in PHEs to ACD, the Government effectively closes a loophole in real estate transfers where buyers could previously purchase stakes in companies that own property and, as a result, avoid BSD and ABSD.
In January, United Overseas Bank chairman emeritus Wee Cho Yaw made headlines when media reports revealed that he had bought all 45 unsold units at The Nassim for S$411.6 million through his family’s private real estate arm, Kheng Leong. Mr Wee’s bulk purchase represented a discount of about 18 per cent.
Under the new regime, indirect property transactions will be subject to the new duties. Sellers of shares in PHEs will be made to pay an ACD equivalent to the SSD, while buyers will have to pay the share duty as well as the ACD which is equivalent to the ABSD and BSD.
For direct property transactions, sellers will continue to incur the SSD, albeit at a lower rate, and the holding period is reduced to three years from four years. Buyers will still be subject to the ABSD and BSD.
Mr Wong emphasised that the measure will not impact the ordinary buying and selling of shares by retail investors in equities listed on the Singapore Exchange.
“The ACD will apply to acquisition or disposal of equity interest by owners with significant equity interest in a PHE. To be considered a significant owner, one has to either presently hold at least 50 per cent equity interest in a PHE, or hold at least 50 per cent interest after the equity acquisition,” said Mr Wong.
To mitigate any potential attempt to circumvent the 50 per cent threshold, the MOF will take into account the equity interest held by associates, including a parent company and subsidiary, or in the context of individuals, a father and his children, husband and wife, he added.
Each of his daughters will also have a room to themselves.
“(The new flat) fits into our needs. In terms of personal space, everyone has their fair share,” he added.
[ Last edited by superman at 2017-10-1 16:52 ]
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