1) What is the Duty that I need to pay as a Buyer of Property-Holding Entities (PHEs)?

In addition to existing stamp duty on shares, the Additional Conveyance Duties for Buyers (ACDB) will apply on qualifying acquisition of equity interests in the PHE (“Target”) based on the market value of the underlying residential property.

Additional Conveyance Duties for Buyers (ACDB) Rates

  (A) If the Target is a Type 1 PHE 

Market value if the underlying residential property

own by the Target ('W')

ACDB is the sum of (i) & (ii)  
(i)  On first $180,000 1% x U/V x W
     On next $180,000 2% x U/V x W
     On the remainder 3% x U/V x W
 
(ii)  15% on the entire value 15% x U/V x W
 
 (B) If the Target is a Type 2 PHE    

Market value if the underlying residential property

own by the Target ('W1')

ACDB is the sum of (i) & (ii)  
(i)  On first $180,000 1% x U/V x W1 x X
     On next $180,000 2% x U/V x W1 x X
     On the remainder 3% x U/V x W1 x X
 
(ii)  15% on the entire value 15% x U/V x W1 x X
 
  (C) If the Target is both Type 1 and Type 2 PHE  
   ACDB is the sum of (A) and (B).

 Where

  • U/V is the relevant percentage of equity interest in the Target that is subject to ACDB.
  • X is the percentage of equity interest that the Target beneficially owns in the related entities which are Type 1 PHE.

Note: The above table is a simplified version. For the full version, please refer to IRAS e-Tax Guide on Stamp Duty: Additional Conveyance Duties (ACD) On Residential Property-Holding Entities.

 

2) How does ACDB work?

Example on ACDB

On 20 Mar 2017, Mr and Mrs Tan acquire 30% and 40% equity interest in Company A that directly owns a residential property valued at $8M. Company A’s total tangible assets is $10M.

STEP 1: Determine if the target is a PHE

Asset percentage = $8M/$10M = 80%

Company A is a Type 1 PHE as 80% of its total tangible assets is residential property.

STEP 2: Determine the buyers’ associates
Mr and Mrs Tan are associated as they are husband and wife.

STEP 3: Determine if the 50% significant ownership is met

Mr and Mrs Tan’s equity interest acquired will be added together as they are associated and together, they are significant owners since 30% + 40% cross the 50% significant ownership threshold.

STEP 4: Compute the ACDB payable 

  • Mr Tan: ACDB x 30% x $8M
  • Mrs Tan: ACDB x 40% x $8M

For more information on examples and computation, please refer to IRAS e-Tax Guide on Stamp Duty: Additional Conveyance Duties (ACD) On Residential Property-Holding Entities.

     

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