Stamp duties for agreements for the sale of shares or any interest in shares were remitted with effect from 11 April 2018 except where the shares to be transferred are in property-holding entities. Duty remains payable on the transfer instrument in all cases. The effect is to bring the position back to the pre-11 March 2017 position except where the shares in question are shares in property-holding companies.
The Stamp Duties (Agreements for Sale of Equity Interests) (Remission) Rules 2018 (Remission Rules) was issued and came into force on 11 April 2018. It remits stamp duty on the agreement for the sale of shares or any interest in shares in following circumstances:
- Where stamp duty is leviable under section 22(1) of the Stamp Duties Act (Act) on a contract or agreement for the sale of shares in all companies except property-holding companies.
- Where stamp duty is leviable on a contract or agreement for the sale of any book-entry securities in a property-holding company.
- Where stamp duty is leviable on a contract or agreement for the sale of shares in a property-holding company executed on or after 11 March 2017 and the following apply:
- The contract or agreement is rescinded or annulled; and
- The purchaser did not procure the rescission or annulment with a view to facilitating the disposition of the equity interests by the vendor to another person.
The previous position
On 11 March 2017, the Act was amended with the result that stamp duty was chargeable on a contract or agreement for the sale of shares as if it were an actual conveyance on sale of the shares. Prior to that date, stamp duty was only payable on the instrument of transfer.
The concern that arose with the requirement to pay stamp duty on an agreement for the sale and purchase of shares was that if the sale did not complete for any reason, it was not clear whether there was a right to a refund of the stamp duty that was paid. To deal with this, especially where non-completion was a possibility, parties would sometimes structure an agreement for the sale and purchase of shares as a put-and-call option.
As a result of the Remission Rules, the position on stamp duty for the sale and purchase of shares reverts to its pre-11 March 2017 position. Accordingly, except for property-holding companies, where there is a sale and purchase of shares, only the instrument of transfer (and no longer the agreement) is stampable. For these purposes, generally speaking, a company is a property-holding company if the property that it holds is residential property.
For such property-holding companies, stamp duty remains leviable on the agreement unless:
- The property-holding company is a listed company, in which case stamp duty is remitted in whole; or
- The sale of the shares in the property-holding company is aborted, in which case stamp duty is remitted in part – a nominal stamp duty must still be paid.
In the situation where the contract for the sale of shares in a property-holding company is rescinded or annulled, the nominal amount that must be paid is up to SGD50 each in stamp duty and additional stamp duty.