IRAS issues second edition of the e-Tax Guide “Income Tax & Stamp Duty: Mergers and Acquisitions Scheme”

21 May 2014

On 16 May 2014, the Inland Revenue Authority of Singapore (“IRAS”) issued the e-Tax Guide “Income Tax & Stamp Duty: Mergers and Acquisitions Scheme (Second Edition)”. The first edition of the e-Tax Guide was issued on 28 June 2012.

The e-Tax Guide sets out the details of the mergers and acquisitions (“M&A”) allowance and stamp duty relief scheme (collectively, the “M&A scheme”) that was introduced in Budget 2010 and enhanced in Budget 2012.

The M&A scheme is relevant to a company incorporated and tax resident in Singapore that acquires a controlling ordinary share stake in another company.

In the second edition of the e-Tax Guide, paragraph 12.4 has been revised. Following the revision, the acquiring company/registered business trust (“RBT”) is no longer required to submit any supporting documents/information with its income tax return when making a claim only for the M&A allowance and not stamp duty relief under the M&A scheme. Instead, it needs to prepare and retain the following documents/information for a period of at least five years from the relevant year of assessment:

(a) Confirmation by a responsible officer of the acquiring company/ RBT that all qualifying conditions for M&A allowance have been met;

(b) A copy of the executed share purchase agreement and if such an agreement is not available, the instrument of transfer;

(c) A copy of the latest statement of accounts of the target company (accounts must be within 24 months from the date of agreement or transfer, as the case may be), whether the target company is incorporated in Singapore or outside Singapore;

(d) An independent professional valuation report of the ordinary shares of the target company acquired under any of the following circumstances:

(i) the target company is incorporated outside Singapore;

(ii) the acquisition is funded by way of the acquiring company/acquiring RBT’s issuance of shares/units and the market value of such shares/units is not readily available; or

(iii) the acquiring company/RBT does not wish to determine the M&A allowance based on the net asset value (“NAV”) of its shares/ units.

The above documents should be submitted to the Comptroller of Income Tax upon request.

For the full details, please refer the e-Tax Guide on the IRAS website.

Source: Inland Revenue Authority of Singapore