This tax incentive and the income tax allowance for qualifying M&As were announced in the 2010 Budget statement to support business restructuring. Under the scheme, acquirers can be granted up to S$200,000 of stamp duty relief per financial year for the acquisition of ordinary shares, subject to qualifying conditions. The MOF also released the draft Stamp Duties (Relief from Stamp Duty Upon Acquisition of Shares of Companies) Rules 2010 for comment. The draft rules will, among other things, contain the conditions for relief from ad valorem stamp duty on the acquisition of ordinary shares of a target company by an acquiring company. The legislative changes to implement this tax incentive will be deemed to have come into force on 1 April 2010.

The proposed amendments will clarify that the Minister for Finance may impose conditions for any reduction or remission of stamp duty. The amendments will also provide that, if a person granted a reduction or remission does not comply with any of the conditions imposed, the government will be able to recover the amount of tax reduced or remitted as a debt. Penalties will apply for late payment of this debt.

Under the proposed amendments, when qualifying conditions for stamp duty relief (for example, for transfer of assets between associated entities) are breached, the stamp duty that was not payable earlier because relief was granted, must be paid within a month of the payment notice issued by the Commissioner of Stamp Duties. Failure to pay this will attract late payment penalties.

More details of these proposed changes are set out in the summary table on tax changes (see below).

The following materials may be accessed from the MOF website (www.mof.gov.sg) by clicking on the provided links: