STAMP DUTIES (AMENDMENT) BILL

Order for Second Reading read.

The Second Minister for Finance (Mr Lim Hng Kiang): Mr Deputy Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

Introduction

The Bill seeks to amend the Stamp Duties Act to give legislative authority to the tax changes announced in Budget 2000.

Rationale

The current section 15 of the Stamp Duties Act provides stamp duty relief for corporate restructuring and mergers. Relief from ad valorem duty is given based on the principle that there will be no substantial change in ownership of the transferred assets. As section 15 is a relieving section, several conditions have been set for the concession.

In recognition that companies restructure and merge to obtain greater synergy, achieve cost competitiveness and deliver better products and services to increasingly sophisticated consumers, Dr Richard Hu announced in Budget 2000 that the conditions for section 15 relief will be relaxed so that more companies can enjoy the tax savings.

Dr Hu also announced that relief would be granted to a transfer of assets between associated companies. This relief was previously not available.

To effect the above changes, the Bill repeals the current section 15 and introduces a new section 15 to allow ad valorem duty relief for:

(a) a transfer of the undertaking or shares in respect of a scheme for the reconstruction or amalgamation of companies; and

(b) the transfer, conveyance or assignment of any beneficial interest in any asset between associated companies.

In order to prevent abuse and to limit the concession to deserving restructuring and merger schemes, we have imposed qualifying conditions. The conditions to be imposed have been announced via a circular issued by the Inland Revenue Authority of Singapore. The expanded relief scheme has been effected administratively since 1st July 2000.

The response to the expanded relief scheme has been encouraging. We will continue to monitor industry trends and amend the conditions when necessary, to make sure that they remain relevant to the business community.

Sir, I beg to move.

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House.

The House immediately resolved itself into a Committee on the Bill. - [Mr Lim Hng Kiang].

Bill considered in Committee; reported without amendment; read a Third time and passed.