BACKGROUND
A public consultation exercise on the draft Stamp Duties Amendment Bill 2004 was held from 15 July to 11 August 2004. The exercise was to obtain feedback on the draft legislation which could facilitate compliance for taxpayers.
2. The draft Stamp Duties Amendment Bill 2004 introduces amendments to the Stamp Duties Act relating to the imposition of duty on Limited Liability Partnerships ("LLPs"). Some examples include:
i. Exemption of stamp duty for general partnerships reconstructing as LLPs; and
ii. Bringing within the scope of stamp duty transfer of interest in LLP where the LLP assets include immovable property or stock or shares.
3. The summary table in Annex A lists all the tax changes and explains the amendments to the Stamp Duties Act that were proposed.
PARTICIPANTS OF THE CONSULTATION EXERCISE
4. A total of 4 comments were received from 2 respondents, both of whom are from professional bodies.
SUMMARY OF COMMENTS
5. Amongst the comments received, three relate to the drafting of the Amendment Bill while the last was a request to review the treatment of stamp duty on acquisition of additional interest in LLPs.
6. MOF has accepted all the comments. The comments received and MOF's responses are furnished below:
1. Comments to confine the imposition of Stamp Duty only to situations where the immovable property or stocks or shares are in Singapore.
Sections 31(1) (b) and 31(5)
Two comments suggested inserting the words "in Singapore" in both sub-sections so that stamp duty would not be imposed on the transfer of interest in LLPs, if the LLP owns immovable property or stocks or shares outside Singapore. The third feedback remarked that the absence of these words would result in the scope of the anti-avoidance measure being “wider than what it was intended to combat as transfers of foreign properties would also be caught”.
MOF’s response: Accepted. This amendment makes it clear that LLPs (owning such properties outside Singapore) will be relieved from having to notify IRAS on transfers of interest and to seek a subsequent remission, thus removing unnecessary compliance costs.
2. Imposition of Stamp Duty on transfer of interest in LLP
Professional service firms like auditors, tax accountants and lawyers may be interested to form LLPs to practise. It is common for such firms to admit or retire partners as well as to change the profit sharing ratio of the firm regularly. The provisions as drafted would consider these as a transfer of interest in the LLP chargeable properties (e.g. immovable property or stocks or shares), which are subject to stamp duty. Imposing a stamp duty on such changes in the LLP composition may discourage the usage of such a vehicle for professional practices.
MOF's response: Accepted. MOF will modify the policy to impose duty only where there is an admission or exit of the partners in the LLP. In addition, MOF is studying other options to determine a partner's interest in the LLP's chargeable properties that is more equitable to the partners. Further details will be released by IRAS by December 2004.
7. MOF thanks all who submitted comments. We will continue the practice of consulting the public before finalising legislation that come under our purview.