The tax changes are coming out of the 2012 budget expands stamp duty relief to acquisitions carried out through multiple tiers of entities, and not just through one tier of wholly-owned subsidiaries. The amount of stamp duty relief, which is granted to the acquiring company only, is capped at $163,000 for every financial year.
The M&A Scheme is attempting to help companies incorporated and tax resident in Singapore, which carries on substantive business operations in Singapore. It is relevant to a company that acquires a controlling ordinary share stake in another company, and in addition to a corporate income tax allowance, provides stamp duty relief on any contract or agreement for the sale or transfer of ordinary shares under an M&A deal.
The sale or transfer instrument must be executed during the period from April 1, 2010 to March 31, 2015, to be eligible for the package, and the acquiring company may acquire the ordinary shares of the target company directly or through an acquiring subsidiary, there is no any other way to go about this currently.
The new bill will also include an extension to the appeal deadline for stamp duty from the current 21 days to 30 days to align with the deadlines for other tax types, such as income tax and the goods and services tax. This is beginning to fall inline with international standards and it mainly gives companies enough time to get their paperwork in order. Additionally, the bill clarifies that stamp duty is not chargeable on a conveyance on sale of any type of property other than immovable property (such as land), stock and shares.
