In this article, we will cover:
- What is the Stamp Duty in Singapore?
- To Which Documents Does Stamp Duty Apply?
- What is the Stamp Duty Rate and How is it Calculated?
- How To Pay Stamp Duty?
- When is the Due Date?
- What is the Penalty for Failure to Pay Stamp Duty?
What is the Stamp Duty in Singapore?
Stamp duty is a tax that applies to various transactions in Singapore, such as property purchases, lease agreements, and shares transfers at the ad valorem rate or at a fixed amount set for each document.
When purchasing property, buyers are required to pay Buyer’s Stamp Duty (BSD) based on the purchase price or market value, whichever is higher. The BSD rates range from 1% to 5% depending on the property value, and an additional 1% is levied on the portion of the value above S$3 million for residential properties.
For lease agreements, tenants are required to pay Stamp Duty based on the total rent over the lease period. The Stamp Duty rates range from 0.4% to 3% depending on the lease period and the annual rent.
When transferring shares, a Stamp Duty of 0.2% is payable on the consideration or the net asset value (NAV), whichever is higher. There are also exemptions available for certain types of share transfers, such as those between related parties or for the purpose of corporate restructuring.
It’s important to note that Stamp Duty must be paid within 14 days from the date of the document, and failure to pay can result in penalties and interest charges. Additionally, stamp duty is not refundable if the transaction falls through or if there is a change in the terms of the agreement.
To avoid any issues with Stamp Duty, it is recommended that individuals consult with a legal professional or licensed property agent to ensure compliance with the regulations.
Stamp Duty is the tax governments place on legal documents. In Singapore, Stamp Duty applies to dutiable documents relating to any immovable property in Singapore as well as any stock or shares. Stamp Duty is levied at the ad valorem rate or at a fixed amount set for each document.
To Which Documents Does Stamp Duty Apply?
The contract documents and documents subject to Stamp Duty in Singapore are detailed below:
- Stamp Duty for Property (Lease / Tenancy Agreements for Properties, Transfer Documents for Properties and Mortgages for Properties)
- Stamp Duty for Shares (Transfer Documents for Shares and Mortgages for Shares)
- Stamp Duty for Property-Holding Entities
This article focuses on Stamp Duty for corporations. For more details of Stamp Duty for Property, please refer to the IRAS website.
However, in the case of office rental, it is helpful to know that Stamp Duty will be levied when you conclude a lease contract. The Stamp Duty bearer is generally stated in the contract. In practice, the borrower’s burden is common.
What is the Stamp Duty Rate and How is it Calculated?
The calculation for Stamp Duty differs between types of documents.
Purchase / acquisition of shares
The Stamp Duty on the share transfer agreement will be 0.2% of the actual selling price or the Net Asset value, whichever is higher.
For example, if you buy a Singapore corporation for SGD 100,000 (buying and selling price = net asset price), the calculation is 100,000 x 0.2% (0.002) = 200. Therefore, the Stamp Duty will be SGD 200.
Mortgages for Shares:
When a document (stock pledge setting contract) is created by borrowing from a bank with stock as the collateral, the Stamp Duty is subject to a maximum duty of $500.
You can also use the Stamp Duty Calculator by IRAS from their website.
How To Pay Stamp Duty?
If the contract document mentions a person who will bear the Stamp Duty, that person will pay it. If not stated, the buyer will pay.
You can stamp your documents through any of the following:
- e-Stamping websites
- Service Bureaus
- e-Terminals at IRAS Surf Centres
When is the Due Date?
A document should be stamped before all signatures. However, if you have signed a document and stamped it within the following time frame, no penalty will be charged:
- Within 14 days after signing the document if it is signed in Singapore or
- Within 30 days after receiving the document in Singapore if the document is signed overseas
What is the Penalty for Failure to Pay Stamp Duty?
The Act stipulates that use of a dutiable document despite late payment or non-payment of Stamp Duty is an offence. In this scenario, a penalty of up to four times the duty owed can be imposed on the documents. This penalty also applies to documents that are unstamped, insufficiently stamped or stamped late.
