SINGAPORE: Deputy Prime Minister and Minister for Finance Lawrence Wong said on Tuesday (May 7) that after reviewing cases involving tax avoidance, the Inland Revenue Authority of Singapore (IRAS) is set to recover about S$60 million.
There were 187 cases where private property was bought that involved the “99-to-1” scheme to avoid paying additional buyer’s stamp duty (ABSD). Among them, 166 cases involved tax avoidance, said Deputy Prime Minister.
“About S$60 million in ABSD and surcharges will accordingly be clawed back,” he said in Parliament.
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Workers Party MP He Ting Ru (Sengkang GRC) had asked about the IRAS investigations into the “99-to-1” arrangement for stamp duty payment.
She specifically asked how many referrals the IRAS has made to the Council for Estate Agencies and the Law Society, as well as whether there are any findings that the Government has to share about the results of this referral.
She further asked if the government would be helping those who estate agents and lawyers have wrongly advised to obtain compensation.
Mr Wong explained that the “99-to-1” arrangement is a tax avoidance arrangement some property buyers use to reduce the rightful ABSD.
“When such property purchase arrangements are made to reduce the tax payable, the Commissioner of Stamp Duties is empowered under Section 33A of the Stamp Duties Act to disregard the individual transactions and assess them as a single joint purchase and to recover the rightful amount of ABSD due, along with a 50 per cent surcharge,” Mr Wong said.
He added that around 10 cases among the 166 involving tax avoidance have evidence of potential involvement by property agents. These are presently being reviewed by the Council for Estate Agencies (CEA).
According to IRAS, “Liable buyers are required to pay ABSD on top of the existing Buyer’s Stamp Duty (BSD). ABSD and BSD are computed on the purchase price as stated in the dutiable document or the market value of the property (whichever is the higher amount).”
In 2018, the government increased the ABSD as a property cooling measure in response to the en-bloc frenzy that began the year before.
As part of the curbs introduced to ease the property market, the authorities raised the ABSD for citizens buying second and subsequent homes to 12 per cent. /TISG