Share Transfer Stamp Duty

Share Transfer Stamp Duty | Bestar

Singapore Share Transfer Stamp Duty

Stamp duty in Singapore applies to the transfer of shares in both public and private companies. It is a tax on the documents related to the transfer of ownership. Here's a detailed overview:   

What is Stamp Duty for Shares?

Stamp duty is a tax levied on the documents that legally transfer the ownership of shares from one party to another. This applies whether you are buying shares in an existing company or receiving them through other means.

Applicable Documents:

Stamp duty is payable on the following types of documents related to share transfers:

• Transfer of Share Document: This includes agreements for sale and purchase and instruments of transfer that are signed when shares are bought or acquired.

• Mortgage for Share Document: This is signed when shares are pledged to a bank or financial institution as collateral for a loan.

Stamp Duty Rate:

The current stamp duty rate for share transfers is 0.2% of either:

• The actual price paid for the shares, or

• The market value of the shares at the time of the transfer,   

whichever is higher. The stamp duty amount is rounded down to the nearest dollar, with a minimum duty of $1.   

Determining the Value of Shares:

The method for determining the value of shares depends on whether the company is public or private and its age:

• Public Listed Companies: The value is typically based on the average price of the shares on the Singapore Stock Exchange (SGX) on the date of the transfer. If no average price is available on that date, the latest available average price can be used.

• Private Companies (Incorporated for more than 18 months): The value of the shares transferred is usually taken as the Net Asset Value (NAV) of the target company. The NAV is computed based on the latest statement of accounts, dated within 24 months before the transfer date. If the company owns property, the market value of the property at the date of the document should be used if it differs from the book value.   

• Private Companies (Incorporated for 18 months or less): If the company doesn't own property, the value is the allotment price of the shares. If the company owns property, management accounts need to be prepared to determine the NAV of the shares, reflecting the property's market value at the transfer date.

Who Pays the Stamp Duty?

Unless the transfer agreement specifies otherwise, the buyer or transferee of the shares is responsible for paying the stamp duty.

When to Stamp the Document and Payment Deadline:

The dutiable document should ideally be stamped before it is signed. However, if the document has been signed, there is a grace period to stamp it without incurring penalties:

• If the document is signed in Singapore: within 14 days after the date of signing.   

• If the document is signed overseas: within 30 days after the date it is received in Singapore.   

How to Pay Stamp Duty:

Stamp duty can be paid through the following methods:

• e-Stamping Portal on the Inland Revenue Authority of Singapore (IRAS) website. This is the most convenient method.   

• Service Bureaus at selected SingPost locations.   

• e-Terminals located at the IRAS Surf Centre.   

Consequences of Late or Non-Payment:

Failure to pay stamp duty by the due date can result in penalties of up to four times the amount of duty payable. The IRAS may also take legal action to recover the unpaid duty.

Exemptions:

Certain share transfers may be exempt from stamp duty. These can include:   

• Transfers of shares by way of gift.   

• Transfers of shares to a spouse or child.

• Transfers of shares to a trust for the benefit of a spouse or child.

• Transfers of shares to a company wholly owned by the transferor.   

• Transfer of scripless shares (as no physical transfer document is executed).

It's always advisable to check the latest guidelines on the IRAS website or consult a tax professional to determine the specific stamp duty obligations for your share transfer.

How Bestar can Help

Bestar can provide valuable assistance with stamp duty for shares in Singapore in several ways:   

1. Determining Stamp Duty Liability:

• Clarifying Applicability: Bestar can help you understand if your specific share transfer is subject to stamp duty. Not all share transfers are dutiable (e.g., transfers of scripless shares without a written instrument, certain transfers as gifts or between related parties might be exempt).   

• Identifying Dutiable Documents: We can identify which documents related to the share transfer (e.g., transfer instrument, sale and purchase agreement) are subject to stamp duty.

2. Accurate Valuation of Shares:

• For Private Companies: Determining the market value or Net Asset Value (NAV) of shares in a private company can be complex, especially for companies that own property or are newly incorporated. Bestar can accurately assess the value, ensuring you pay the correct stamp duty based on the higher of the transacted price or the market value/NAV.   

• Understanding Valuation Methods: We can explain the different valuation methods used by IRAS for stamp duty purposes based on the company's age and assets.

3. Correct Calculation of Stamp Duty:

• Applying the Right Rate: Bestar ensures the correct stamp duty rate of 0.2% is applied to the accurate value of the shares.

• Considering Minimum Duty: We will also ensure that the minimum stamp duty of $1 is accounted for.   

4. Ensuring Timely Stamping and Payment:

• Advising on Deadlines: Bestar can remind you of the strict deadlines for stamping the transfer documents (within 14 days if signed in Singapore, 30 days if signed overseas) to avoid penalties.   

• Facilitating Payment: We can directly pay the stamp duty for you. We can guide you through the e-stamping process on the IRAS portal or other payment methods.

5. Navigating Exemptions and Reliefs:

• Identifying Eligibility: Bestar is knowledgeable about potential stamp duty exemptions or reliefs that might apply to your specific situation (e.g., transfers within a group of companies, genuine gifts to close family members). We can help you determine if you qualify and guide you through the application process if required.

• Applying for Exemptions/Reliefs: Some exemptions or reliefs require specific applications to IRAS. Bestar can assist in preparing and submitting the necessary documentation.

6. Ensuring Compliance and Avoiding Penalties:

• Understanding IRAS Regulations: We stay updated on the latest stamp duty rules and regulations issued by IRAS, ensuring your transaction complies with the law.

• Preventing Errors: Our expertise helps avoid mistakes in valuation, calculation, or the stamping process, which could lead to penalties from IRAS.   

7. Acting as Intermediaries:

• Liaising with IRAS: In case of queries or issues with the stamp duty assessment, Bestar can act as a point of contact with IRAS on your behalf.

Bestar Can Help:

• Bestar handles share transfers as part of our services and is well-versed in stamp duty requirements.

• We can assist with the valuation of shares, especially for private companies, and ensure the correct calculation of stamp duty.

• We can advise on the legal aspects of share transfers and ensure the transfer documents are correctly stamped.

• We specialize in tax matters, including stamp duty, and can provide comprehensive advice on your obligations and potential exemptions.

In summary, engaging Bestar can streamline the process of dealing with stamp duty for shares, ensure accuracy, compliance, and potentially save you time and money by identifying exemptions and avoiding penalties.   

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