What is ACD?

Additional Conveyance Duties (ACD) applies if you are acquiring or disposing of equity interests (e.g. shares or units) in property-holding entities that own primarily residential properties in Singapore (PHEs). The ACD provision applies to the acquisition or disposal of equity interests by persons or entities who are significant owners of the PHE or who become one after the acquisition.

The Stamp Duties (Amendment) Bill (the “Bill”) was introduced in Parliament on 9 May 2022. The Bill introduced Additional Conveyance Duty (“ACD”) for (i) transfers of equity interests in Property Holding Entities (“PHEs”) into trusts for non-bare trust beneficiaries; and (ii) distribution of equity interests by trustee to non-bare trust beneficiaries. These changes will take effect on 10 May 2022.

 

ACD flowchart

What is a Qualifying Acquisition/ Disposal? 

A qualifying acquisition happens when equity interest in a PHE (i.e. the target entity) is acquired and the buyer (also known as the transferee, assignee or grantee), together 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.

Each qualifying acquisition is subject to ACDB. It does not apply to equity interest acquired before 11 Mar 2017. 

A qualifying disposal happens when the seller (also known as the transferor, assignor or grantor), 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 Mar 2017; and
  • disposed of within 3 years of acquisition (holding period) on a first-in-first out basis. 

Please refer to "Determining significant owners" for more details on significant owner and associates.

What is a Property-Holding Entity (PHE)?

A PHE is an entity which has at least 50% (i.e. asset ratio) of its total tangible assets comprising prescribed immovable properties ("PIP") in Singapore. A PHE can be a Type 1 PHE, a Type 2 PHE or both. 

PIP means any immovable property that is –

  1. zoned or situated on land that is zoned “Residential”, “Commercial and Residential”, “Residential/Institution”, “Residential with Commercial at 1st Storey”, or “White”;
  2. permitted to be used by a written permission given under section 14(4) of the Planning Act (not being one that is given for a period of 10 years or less) or notification given under section 21(6) of the Planning Act for solely residential purposes or for mixed purposes one of which is residential; or
  3. used for solely residential purposes or for mixed purposes one of which is residential, in a case where the property was so used on 1 Feb 1960 and has not been put to any other use since that date, and where such use is not the subject of a written permission or notification mentioned in paragraph (b).

Type 1 PHE means the target entity has PIP of which the market value makes up at least 50% of the value of the entity's total tangible assets ("TTA").

Type 2 PHE means the target entity:

  • has 50% or more beneficial interest (directly or indirectly) in one or more entities each of which is a Type 1 PHE (henceforth referred to as “related entities”); and
  • the sum of the market value of the PIP beneficially owned by the target entity directly and indirectly through its related entities is at least 50% of the TTA of the target entity and all the entities which the target entity has 50% or more beneficial interest (directly/ indirectly) in.

Dutiable Documents relating to Property-Holding Entities

Dutiable documents relating to the sale/ transfer of equity interest in Property-Holding Entities (PHEs) include both the physical and electronic versions of the following::

  1. Contract or agreement for sale and purchase;
  2. Assignment or transfer;
  3. Gift;
  4. Settlement; and
  5. Declaration of trust

No stamp duties including ACD will apply if the transfer of equity interest in a PHE is pursuant to a will or by way of assent.

Where there is no document executed for the transfer of scripless shares, Stamp Duty is not payable. However, if there is a contract/agreement but the shares transferred are scripless i.e. no subsequent share transfer document, the transferee can apply for share duty and ACD remission.

Electronic Documents

1. What is an electronic document?

An electronic document includes any of the following that effects a transaction in any immovable property in Singapore, and any stock or shares:

  1. An electronic record that effects the transaction;
  2. An electronic record and a physical document that together effect the transaction; or
  3. An electronic record and a verbal communication that together effect the transaction, with the electronic record concluding the transaction. 

2. What is an electronic record?

An electronic record is a record generated, communicated, received or stored by electronic means in an information system or for transmission from one information system to another.

Electronic records include anything sent by email, SMS or any Internet-based messaging service. 

3. What is an electronic signature?

An electronic signature is any electronic method used to identify a person and to indicate the person’s intention in respect of the information contained in an electronic record.

Examples include electronic correspondences (emails, SMS, WhatsApp), electronic signatures (as opposed to wet ink signatures), biometric signatures (retina, fingerprint, voice), clicking on a button in an online system/platform/portal, ID card inserted into a device. 

4. When and where is an electronic document treated as executed?

It is important to know when and where an electronic document is executed as it affects the deadline by which you need to stamp the document. For documents executed in Singapore, the document has to be stamped within 14 days after the date it has been executed. For documents executed outside of Singapore and subsequently brought into Singapore, the document has to be stamped within 30 days after it has been received in Singapore.

Please refer to the scenarios below to identify which applies to you and when and where your electronic document is treated as executed.

Scenario A
If the electronic document is an electronic record, or consists of an electronic record and a physical document/verbal communication (where the transaction is concluded by the electronic record), it is treated as executed at the time and place that an electronic signature is applied to the electronic record.

Scenario B
If the electronic document consists of an electronic record and a physical document (where the transaction is concluded by the physical document), it is treated as executed at the time and place that the physical document is signed.

 Examples
A sends an email from Malaysia offering to sell property to B. B sends an email from Singapore accepting A’s offer. The electronic document is treated as executed in Singapore and at the time B sends the second email.

A makes an offer to sell property on an Internet website. B uses a computer in Singapore to transmit his acceptance of A’s offer. The electronic document is treated as executed in Singapore and at the time B transmits his acceptance.

5. If an electronic document is executed outside of Singapore, when is it treated as received in Singapore?

It will be treated as received in Singapore in any of the following scenarios:

  1. The electronic document is retrieved or accessed in Singapore;
  2. An electronic copy is stored on a device and brought into Singapore; or
  3. An electronic copy is stored on a computer in Singapore.

 Examples
A and B effect outside Singapore a transaction by means of an electronic document, which is saved on a server outside Singapore. B downloads a copy of the electronic document in Singapore. The electronic document having been retrieved by a person in Singapore, is received in Singapore.

A and B effect outside Singapore a transaction by means of an electronic document, which is saved on a server outside Singapore. B uses a device (e.g. tablet) to view a copy of the electronic document in Singapore. The electronic document having been accessed by a person in Singapore, is received in Singapore.

A and B effect outside Singapore a transaction by means of an electronic document, which is saved on a server outside Singapore. B saves a copy of the electronic document on a device (e.g. thumb drive) and brings the device into Singapore. The electronic document having been stored on a device and brought into Singapore, is received in Singapore.

A and B effect outside Singapore a transaction by means of an electronic document, which are stored on a server in Singapore. The electronic document having been stored on a computer in Singapore, is received in Singapore. 

Arrangements chargeable with ACD

Section 23C of the Stamp Duties Act provides that certain arrangements# would be chargeable with ACD if they have the effect of:

  1. Changing in the amount of equity interest^ in a PHE, which would have otherwise resulted in ACD; or
  2. Resulting in an entity ceasing to be a PHE (e.g. a change in the composition of the tangible assets of an entity) and that arrangement takes place within 1 year of the execution of the instrument which would otherwise been chargeable.

For the purpose of paragraph (a), the Commissioner of Stamp Duties is satisfied that an issuance of equity interest for capitalisation purposes is not subject to ACD if there are no changes in the persons holding the equity interest and the respective holdings of equity interest, before and after the issuance. There is no need to seek the Commissioner’s opinion for such scenarios.

# Whether or not there are any instruments relating to the arrangement. In the absence of such instruments, the buyer/seller is required to give to the Commissioner of Stamp Duties a notice of the arrangement using this form (PDF, 138KB)

^ Examples of such arrangement are an acquisition or issuance by an entity of its equity interests; and a cancellation, redemption or conversion of equity interest.

FAQs

There are possible unforeseen consequences on business transactions – for example, fund managers are not speculators of residential property and the ACD on share transfers will also affect estate planning.

The ACD is not a property market tightening measure. It is intended to address the stamp duty rate differential between the direct buying/ selling of residential property and the buying/selling of equity interest in entities holding primarily residential properties.

On estate transfers, no stamp duties including ACD will apply if the transfer of equity interest in a PHE is pursuant to a will or by way of assent.

What if entities undertake joint venture (JV)agreements for property development? For example, when a company acquires the land first via a special purpose vehicle (SPV) before bringing in a JV partner, is the sale of a 50% equity interest in that SPV (assuming it is a PHE) to the JV partner subject to ACD? Would the JV partner be able to obtain remission since it is developing residential properties through the SPV?

The transfer of 50% equity interest in the PHE to the incoming JV partner will attract both ACDB and ACDS if it satisfies the qualifying conditions.

Parties who jointly own the SPV before acquiring the land through the SPV will not incur ACD.

The SPV will enjoy the ABSD housing developers remission on the residential land acquired by it, if the residential development project fulfils the ABSD remission conditions.

Where there is a mortgage of equity interest in a PHE and the mortgagee (lender) exercises the power of sale upon default, will the mortgagor be subject to ACDS?

If the equity interest disposed of was acquired on or after 11 Mar 2017 and within 3 years of purchase and the mortgagor was ever a significant owner, the mortgagor will be liable for ACDS arising from the sale by the mortgagee.

Are contracts or agreements for sale of stocks and shares in a PHE dutiable?

Yes, stamp duties will be payable on the contract/ agreement for the sale of stocks and shares or the share transfer document, whichever is earlier. However, if there is a contract/ agreement but the shares transferred are scrip-less, the share duty and ACD will be remitted under rule 3 of the Stamp Duties (Agreements for Sale of Equity Interests) (Remission) Rules (“remission rules”). There is no need to e-stamp or submit an application for remission to IRAS for contract/ agreement which satisfies rule 3 of the remission rules.

The relevant duties remain payable on the executed transfer instrument, if applicable.

For more information on the remission, please refer to remission for agreements for sale of equity interests.

Is ACD payable on issuance of new shares for capitalisation purposes where there are no changes in the shareholders and the shareholding proportion?

An issuance of equity interest is subject to ACD under section 23C(1). However, the Commissioner of Stamp Duties is satisfied that an issuance of equity interest for capitalisation purposes is not subject to ACD if there are no changes in the persons holding the equity interest and the respective holdings of equity interest, before and after the issuance. There is no need to seek the Commissioner’s opinion for such scenarios.

I executed a Sale and Purchase Agreement (“SPA”) to acquire the equity interest of a PHE. The share duty and ACD have been paid. The seller and I decided to abort the sale, can I apply for refund of the share duty and ACD paid?

You can apply for share duty and ACD remission within 6 months from the date of the rescission of the SPA. If you satisfy rule 4 of the Stamp Duties (Agreements for Sale of Equity Interests) (Remission) Rules, refund in excess of $50 for each duty type will be made to the party who is liable for stamp duty.

For more information on the remission, please refer to remission for agreements for sale of equity interests.

I executed a Sale and Purchase Agreement (“SPA”) to acquire the shares of a company which is not a PHE i.e. no ACD payable. Do I pay the share duty on the SPA or the subsequent transfer document?

You will pay share duty on the subsequent transfer document executed. The share duty chargeable on the SPA is remitted under rule 2 of the Stamp Duties (Agreements for Sale of Equity Interests) (Remission) Rules (“remission rules”) if the SPA is not subject to ACD. There is no need to e-stamp or submit an application for remission to IRAS for contract/ agreement which satisfies rule 2 of the remission rules.

For more information on the remission, please refer to remission for agreements for sale of equity interests.