14 October 2017

The execution of a Sale and Purchase Agreement (SPA) for shares are subject to stamp duty, effective from 11 March 2017, following the passing of the Stamp Duties (Amendment) Act 2017 on 10 March 2017, with amendments to Section 22 of the Stamp Duties Act (SDA).

As the words “and stocks and shares,” have been deleted from Section 22(I)(b) of the SDA, it effectively means that the sale of stocks and shares are now dutiable.

Prior to the amendment, stamp duty was payable only on the execution of the instrument of transfer (being the share transfer form), and not on the contracts and agreements for the sale of shares. This in effect brings forward the point at which stamp duty is payable on sales of shares to the execution of the SPA, rather than the transfer of shares that occurs on completion of the agreement.

With the implementation of the new Section 22, stamping must be carried out within 14 days of signing the SPA (if the SPA is executed in Singapore).

Also, should the SPA be conditional upon fulfilment of condition precedents which are not satisfied and completion does not eventually occur, purchasing parties may apply to the Inland Revenue Authority of Singapore for a refund of stamp duties paid. However, there is no assurance or guarantee on the grant of refunds.

Furthermore, SPAs for the sale of scripless shares would now also be stamp dutiable whereas before the amendment, there was typically no stamp duty applicable for the sale of scripless shares since no instrument of transfer was executed for such sale.