What are Additional Conveyance Duties(ACD)?
Introduced in parliament on the 9th of May, Additional Conveyance Duties (ACD) is defined as the tax needed to be paid at a rate of 44% when a consumer is purchasing or selling equity interest in Property Holding Entities that own primarily residential properties in Singapore (PHEs). The ACD clause applies to the purchase or sale of equity interests in the PHE by both individuals or companies that are or will become significant owners of the PHE following the acquisition.
Before we can discuss about ACD, let’s take a look at PHEs first. In Singapore, a PHE is an entity with at least 50% of total tangible assets consisting of Prescribed Immovable Properties (PIP). A PHE can be either type 1 or type 2 or both. More information on PIP can be found here.
| Type1 PHE | Type2 PHE |
| Indicates that the target entity’s PIP has a market value of at least 50% of the Total Tangible Assets (TTA) | Indicates that the target entity has a 50% or greater beneficial interest (directly or indirectly) in one or more type 1 PHEs and where residential property (market value) accounts for at least half of the value of the entity’s TTA |
Determining the ACD payable
The ACD that will be imposed on qualifying sales and transfers of equity interests in PHEs are as follows…
The ACD will be calculated based on the current market value of the PHE’s underlying residential property at the time of the qualifying equity sale/transfer, prorated by the percentage of the PHE’s beneficial interest transferred.
For buying or acquiring property-holding entities, ACDB will be applied if the buyer along with his/her associates has held at least 50% of the ownership interest or voting rights in the PHE or will hold at least 50% as a result of the takeover. Contrastingly, for selling or disposing property-holding entities, ACDS will be applied if the seller along with his/her associates held at least 50% of the equity interest or voting power in the PHE on or after 11 March 2016 and sold within three years.
To sum it up, ACD is a new stamp duty that must be paid on top of the existing stamp duty on every eligible acquisition and disposition of an equity interest in a PHE. The government’s rationale for introducing ACD is to correct the differential in stamp duty rates between direct and indirect acquisition/ disposal of residential properties during a transfer of the equity interest in a holding entity.
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