Buying or Acquiring Shares
Stamp Duty is charged on the document signed when you buy or acquire shares. The duty is payable on the actual price or value of the shares, whichever is higher.
Manner of acquisitions
Examples of shares acquisition in which stamp duty is payable:
- By way of purchase e.g. share transfer instruments
- By way of gift including a voluntary declaration of trust and settlement
Declaration of Trust / Trust Deed
A fixed duty of $10 is payable on the Declaration of Trust / Trust Deed which does not result in a change in beneficial interest in the shares.
Where there is a change in beneficial interest in the shares, full stamp duty will be payable on the Declaration of Trust / Trust Deed.
- By way of distribution as a dividend in specie by a company
- By way of distribution in specie upon the winding up of a company
- By way of distribution from the estate of a deceased that is not in accordance to Will, Intestate Succession Act or Muslim Law of Inheritance
Determining value of shares
1. Shares listed on the Stock Exchange of Singapore
The value of the shares transferred is taken to be the average price on the Stock Exchange of Singapore as at the date of the document.
When there is no available average price as at the date of the document, the latest average price of the shares can be used.
2. Shares in private companies
The value of the shares transferred is taken to be the net asset value (NAV) or the allotment price of the shares being transferred in the target company. Please refer to Example 1 on how to compute the NAV per share and the NAV of the total shares transferred.
Where there are different classes of shares (e.g.: preference shares in the target company), the NAV per share will depend on the rights attached to the respective class of share. Please refer to Example 2 on how to compute the NAV per share for each type of share and the NAV of the total shares transferred.
a. Where the company has been incorporated for more than 18 months
For Stamp Duty purposes, the value of the shares transferred is the NAV of the total shares transferred in the target company. The NAV is computed based on the latest statement of accounts of the target company which should be dated within 24 months before the date of transfer.
Where the target company owns any property (including a leasehold property if it is recorded as a non-current asset in the company's financial accounts), the market value of the property as at the date of document should be used in place of the book value if the book value is not reflective of the market value.
b. Where the company has been incorporated for 18 months or less
For Stamp Duty purposes, the value of the shares transferred is the total allotment price of the shares being transferred if the target company does not own any property.
Where the target company owns any property (including a leasehold property if it is recorded as a non-current asset in the company's financial accounts), the management accounts have to be prepared to determine the NAV of the shares transferred.
The statement of accounts or management accounts should:
a. Reflect the market value of the property as at the date of document for the share transfer
b. Be certified by the director or secretary of the company
Rates and computation
Stamp Duty for transfer of shares | 0.2% of the purchase price or the value of the shares transferred |
Stamp duty is rounded down to the nearest dollar, subject to a minimum duty of $1.
A. Target company owns only ordinary shares
Example: Transfer of shares in target company that owns only ordinary shares
Total assets : $850,000
Total liabilities: $300,000
Share capital : 100,000 ordinary shares of $1 each fully paid
Number of shares transferred : 5,000 ordinary shares
Total Net Asset Value (NAV) | Total assets - Total liabilities = $850,000 - $300,000 = $550,000 |
NAV per share | $550,000 / 100,000
= $5.50 |
Stamp Duty | 0.2% x NAV for the total share transferred
= 0.2% x ($5.50 x 5,000)
= 0.2% x $27,500
= $55 |
B. Target company owns ordinary shares and preference shares
Example 1: Preference shares have priority to the return of capital over ordinary shares but with no rights to participation in surplus asset
Total assets: $900,000
Total liabilities: $300,000
Share capital: Value of 100,000 fully paid-up ordinary shares is $100,000 and value of 200,000 fully paid-up preference shares is $200,000
Number of shares transferred: 5,000 ordinary shares and 5,000 preference shares
Notes:
a. The net asset value is first used to pay off the preference shares
b. Any surplus is distributed to the ordinary shares
| Total Net Asset Value (NAV) | Total assets - Total liabilities
= $900,000 - $300,000
= $600,000 |
| NAV per preference share | Capital | Surplus asset |
Return of capital to preference shares / Number of preference shares
= $200,000 / 200,000
= $1 | No rights to surplus asset |
| NAV per ordinary share | Capital | Surplus asset |
Return of capital to ordinary shares / Number of ordinary shares
= $100,000 / 100,000
= $1
| Balance of NAV after return of capital to preference and ordinary shares
= Total NAV - Return of capital to preference and ordinary share
= $600,000 - ($200,000 + $100,000)
= $300,000
Distribution of surplus
asset (per share)
= $300,000 / 100,000
= $3 |
NAV per ordinary share
= $1 + $3
= $4 |
| Stamp Duty | 0.2% x NAV for the total shares transferred
= 0.2% x [($1 x 5,000) + ($4 x 5,000)]
= 0.2% x ($5,000 + $20,000)
= 0.2% x $25,000
= $50 |
Example 2: Preference shares and ordinary shares have equal priority to the return of capital and equal rights to participation in surplus assets
Total assets: $1,000,000
Total liabilities: $500,000
Share capital: Value of 200,000 fully paid-up ordinary shares is $200,000 and value of 200,000 fully paid-up preference shares is $200,000
Number of shares transferred: 10,000 ordinary shares and 20,000 preference shares
Notes:
a. The net asset value is first used to pay off all the preference and ordinary shares
b. Any surplus is distributed to all the preference and ordinary shares equally
| Total Net Asset Value (NAV) | Total assets - Total liabilities
= $1,000,000 - $500,000
= $500,000 |
| NAV per preference share | Capital | Surplus asset |
Return of capital to preference shares / Number of preference shares
= $200,000 / 200,000
= $1
| Equal rights to surplus asset
Balance of NAV after return of capital to preference and ordinary shares
= Total NAV - Return of capital to preference and ordinary share
= $500,000 - ($200,000 + $200,000)
= $100,000
Distribution of surplus asset (per share)
= $100,000 / 400,000
= $0.25 |
NAV per preference share
= $1 + $0.25
= $1.25 |
| NAV per ordinary share | Capital | Surplus asset |
Return of capital to ordinary shares / Number of ordinary shares
= $200,000 / 200,000
= $1
| Equal rights to surplus asset
Balance of NAV after return of capital to preference and ordinary shares
= Total NAV - Return of capital to preference and ordinary share
= $500,000 - ($200,000 + $200,000)
= $100,000
Distribution of surplus asset (per share)
= $100,000 / 400,000
= $0.25 |
NAV per ordinary share
= $1 + $0.25
= $1.25 |
| Stamp Duty | 0.2% x NAV for the total shares transferred
= 0.2% x [($1.25 x 10,000) + ($1.25 x 20,000)]
= 0.2% x ($12,500 + $25,000)
= 0.2% x $37,500
= $75 |
Example 3: Preference shares have priority to the return of capital over ordinary shares and equal rights to participation in surplus assets
Total assets: $800,000
Total liabilities: $500,000
Share capital: Value of 200,000 fully paid-up ordinary shares is $200,000 and value of 200,000 fully paid-up preference shares is $200,000
Number of shares transferred: 10,000 ordinary shares and 20,000 preference shares
Notes:
a. The net asset value is first used to pay off the preference shares.
b. The net asset value is next used to pay off the ordinary shares.
| Total Net Asset Value (NAV) | Total assets - Total liabilities
= $800,000 - $500,000
= $300,000 |
| NAV per preference share | Capital | Surplus asset |
Return of capital to preference shares / Number of preference shares
= $200,000 / 200,000
= $1
| No surplus left for distribution |
NAV per preference share
= $1 |
| NAV per ordinary share | Capital | Surplus asset |
Return of capital to ordinary shares / Number of ordinary shares
= $(300,000 – 200,000) / 200,000
= $0.50
| No surplus left for distribution |
NAV per ordinary share
= $0.50 |
| Stamp Duty | 0.2% x NAV for the total shares transferred
= 0.2% x [($0.50 x 10,000) + ($1 x 20,000)]
= 0.2% x ($5,000 + $20,000)
= 0.2% x $25,000
= $50 |
Example 4: Preference shares have priority to the return of capital over ordinary shares but with no rights to participation in surplus assets and the company’s net asset value is insufficient to pay off all the shares.
Total assets: $900,000
Total liabilities: $300,000
Share capital: Value of 100,000 fully paid-up ordinary shares is $100,000 and value of 200,000 fully paid-up preference shares is $1,000,000
Number of shares transferred: 5,000 ordinary shares and 5,000 preference shares
Notes:
a. The net asset value is first used to pay off the preference shares.
b. There is no net asset value distributed to the ordinary shares as the net asset value is insufficient to pay off all the preference shareholders.
| Total Net Asset Value (NAV) | Total assets - Total liabilities
= $900,000 - $300,000
= $600,000 |
| NAV per preference shares | Return of capital to preference shares / Number of preference shares
(As the NAV of the company is less than the paid-up capital of the preference shares, the full NAV will be accorded to the preference shares)
= $600,000 / 200,000
= $3 |
| NAV per ordinary share | $0 (insufficient NAV to distribute) |
| Stamp Duty | 0.2% x NAV for the total shares transferred
= 0.2% x ($3 x 5,000)
= 0.2% x $15,000
= $30 |
