Singapore’s Ministry of Finance (‘MOF’) has announced a large increase to the ABSD rates on the acquisition of Singapore residential properties, which will take effect from 27 April 2023.
ABSD rates have been raised across the board (excluding Singapore citizens and permanent residents buying their first residential property), but the increase is greatest for foreigners and non-housing-developer entities. The ABSD rate for foreigners is now 60%, previously 30%. The highest ABSD rate of 65% (raised from 35%) applies to non-housing-developer entities buying residential property.
Correspondingly, the Additional Conveyance Duties for Buyers, which applies to qualifying acquisitions of equity interest in Singapore-residential-property-holding entities, have also been raised from 40% to 65%.
The government has explained that the ABSD rates were increased to “pre-emptively manage investment demand”.
Revised rates for ABSD
A summary of the revised ABSD rates is set out below:
| Profile of buyer | (1) BSD[1] | (2) ABSD | Total Stamp Duty: (1) + (2) | |
| Singapore citizen | 1st residential property | Up to 6% | None(no change) | Up to 6% |
| 2nd residential property | Up to 6% | 20%(previously 17%) | Up to 26% | |
| 3rd residential property onwards | Up to 6% | 30%(previously 25%) | Up to 36% | |
| Permanent resident | 1st residential property | Up to 6% | 5%(no change) | Up to 11% |
| 2nd residential property | Up to 6% | 30%(previously 25%) | Up to 36% | |
| 3rd residential property onwards | Up to 6% | 35%(previously 30%) | Up to 41% | |
| Foreigners | Any residential property | Up to 6% | 60%(previously 30%) | Up to 66% |
| Non-Housing Developer Entity | Any residential property | Up to 6% | 65%(previously 35%) | Up to 71% |
| Transfer to / Declaration of Living Trust over Residential Property – BSD + ABSD (Trust) | ||||
| Any residential property transfer to a Trustee (or declared by a Trustee as being held on) living trust for a beneficiary | Up to 6% | 65%(previously 35%, but remissible subject to conditions) | Depending on profile of the “identifiable individual beneficiary” and satisfaction of all remission conditions[2]. | |
| Transfer of Residential Property pursuant to will, Intestate Succession Act or Muslim Law of Inheritance (‘Succession Laws’) | ||||
| Any transfer of property by way of asset pursuant to will or Succession Laws | None | None | None |
Withers’ observations
- The changes are clearly intended to dampen the demand for property investment by foreigners – as the Minister for National Development has noted, the measures have a pre-emptive intent.
- In the case of acquisitions by trusts, the rate which must be paid up front is hiked to 65%. Although the purchaser could seek a refund where the residential property is held on trust for “identifiable individual beneficiaries” and remission conditions are satisfied, this could create a cash-flow issue and add to the financing costs and burden on the purchaser who is borrowing to finance the acquisition.
- It is worth recalling that under Singapore’s Free Trade Agreements (‘FTAs‘) with the US and the European Free Trade Association, nationals and permanent residents of Iceland, Liechtenstein, Norway or Switzerland, as well as US nationals, are entitled to acquire Singapore residential property at the same stamp duty rate as applicable to Singapore citizens. This makes the concessions for eligible foreign persons even more valuable.
- The Inland Revenue Authority of Singapore (‘IRAS‘) also reiterated in its factsheet on the new ABSD rates that it has the power to counteract tax avoidance arrangements under the Stamp Duties Act, and impose a 50% surcharge on the additional duty payable. This follows recent reports that the IRAS had sought to audit certain property purchase arrangements which have been entered into with the possible intention of avoiding ABSD. IRAS is likely to be even more alert to potential stamp duty avoidance arrangements in view of the increase in ABSD rates.
For further information, or if you require assistance with any matter, please reach out to your usual contact at Withers, or contact Stacy Choong, Chua Yee Hoong, Yeoh Lian Chuan, or Zenzel Chew.
[1] BSD refers to the normal buyer’s stamp duty, which has a top marginal rate of 6%. ABSD is chargeable over and above BSD.
[2] The conditions for remission are summarized as follows (please also see our article available at this link):
- The residential property is held on trust for “identifiable individual beneficiaries”;
- ABSD (Trust) of 65% is paid; and
- The application for remission is made within 6 months after the date of execution of the instrument.
For further information, please contact:
Stacy Choong, Partner, Withersworldwide
stacy.choong@withersworldwide.com
