Effective from 11 March 2017, Additional Conveyance Duties (ACD) will be imposed on any qualifying acquisition and qualifying disposal.
Meaning of Qualifying Acquisition and Qualifying Disposal
A qualifying acquisition happens when equity interest in a Property Holding Entity (“PHE“) (i.e. the target entity) is acquired and the buyer (with any associates) is already a significant owner of the PHE before the acquisition or becomes a significant owner of the PHE after the acquisition.
On the other hand, a qualifying disposal happens when the seller (together with any associates) is a significant owner of the PHE and the equity interest of the PHE disposed of was acquired on or after 11 March 2017; and disposed of within 3 years of acquisition (holding period) on a first-in-first-out basis.
What are the Additional Conveyance Duties?
In addition to existing stamp duty on shares, ACD to be applied on each of the qualifying transfer of equity interests in PHEs are:
- Additional Conveyance Duties for Buyers (ACDB):
Existing Buyer’s Stamp Duty at 1% to 3%
Additional Buyer’s Stamp Duty at 15% (flat rate)
- Additional Conveyance Duties for Sellers (ACDS):
Seller’s Stamp Duty at 12% (flat rate)
What is a Property-Holding Entity (PHE)?
A PHE is a property-holding entity whose primary tangible assets (owned directly/indirectly) are Singapore residential properties.
A PHE can be a Type 1 PHE, a Type 2 PHE or both.
Type 1 PHE means the target entity whose market value of the residential properties makes up at least 50% of the value of its total tangible assets (TTA).
Type 2 PHE means the target entity:
- Which has 50% or more beneficial interest (directly or indirectly) in one or more entities (henceforth referred to as “related entities”) which is a Type 1 PHE; and
- the sum of the market value of the residential properties beneficially owned by the target entity and its related entities is at least 50% of the TTA of the target entity and its related entities.
Who is a Significant Owner of a PHE?
A significant owner of a PHE refers to a person or entity who beneficially owns at least 50% equity interest or voting power in a PHE either on its own or with its associates.
Who are Associates?
In determining whether the 50% ownership threshold for significant ownership is met, the equity interest of the buyer’s and seller’s associates will be taken into account. In certain scenarios, the associates’ equity interests will also be included in the tax computation.
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