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

The Additional Conveyance Duties for Sellers (ACDS) will apply on qualifying disposal of equity interests in the PHE (“Target”) based on the market value of the underlying residential property.

Additional Conveyance Duties for Sellers (ACDS) Rates

  (A) If the Target is a Type 1 PHE  

Market value if the underlying residential property

own by the Target ('W')

ACDS
12% on the entire value 12% x U1/V x W
 
 (B) If the Target is a Type 2 PHE     

Market value if the underlying residential property

own by the Target ('W1')

ACDS
12% on the entire value12% x U1/V x W1 x X
 
  (C) If the Target is both Type 1 and Type 2 PHE
   ACDS is the sum of (A) and (B).

 Where

  • U1/V is the relevant percentage of equity interest disposed of in the Target that is subject to ACDS.
  • 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 ACDS work?

Example on ACDS

Mr Wong owns 80% equity interest in Company B which owns 90% equity interest in Company A. Company A directly owns a residential property valued at $8M and it total tangible assets is $10M. Company B’s total tangible assets is $2M. Mr Wong had previously acquired 40% equity interest in Company B on 1 Jan 2011, 10% on 1 Apr 2017 and 30% on 1 Jan 2019.

Mr Wong sold his 80% equity interest in Company B on 1 Jan 2021. 

STEP 1: Determine if the target is a PHE

Asset percentage for Company A = $8M/$10M = 80%

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

Asset percentage for Company B = $8M x 90% / [$2M + ($10M x 90%)] = 65%

Company B is a Type 2 PHE as it owns 90% equity interest in Company A.

STEP 2: Determine the seller’s associates
Mr Wong is not associated to the other equity-holders in Company B. We will only look at the 80% equity interest belonging to Mr Wong.

STEP 3: Determine if the seller is a significant owner

Mr Wong is a significant owner as he owns 80% in Company B, which is above the 50% significant ownership threshold.

STEP 4: Compute the ACDS payable

  • Mr Wong: ACDS x 30%* x $8M x 90%

*ACDS does not apply to the other 50% equity interest as 40% was acquired before 11 Mar 2017 and 10% was acquired more than 3 years ago from the date of sale. 

 

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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