ABSD Remission under Free Trade Agreements (FTAs) for Foreign Property Buyers From 5 Countries
Foreign buying has always been a major force driving real estate markets across the world, and Singapore is no exception. Year 2020 is an unpresidented Year globally, however some foreign found that they feel comfortable with how Government of Singapore dealing with the pandemic. As a result more foreign buyers are buying property in Singapore as own-stay home, rather than for investments. The following are 5 nationalities that entitled for ABSD Remission due to Trade Agreement to Singapore.
One of the big challenge for buyers are taxation involved in property transaction, specially those who came from the country that paid lower tax in the process.
WHO is Eligible for ABSD Remission?
Among these are citizen & Permanent Residents from some countries which has Free Trade Agreements(FTAs) with Singapore. These 5 Countries are Iceland, Liechtenstein, Norway, Switzerland & United State of America. The FTAs treated each of these country slimily differently as we will illustrate further.
WHAT Are The Effect in Taxation?
Under the respective FTAs, Nationals or Permanent Residents of the following countries will be accorded the same Stamp Duty treatment as Singapore Citizens: Nationals and Permanent Residents of Iceland, Liechtenstein, Norway or Switzerland and Nationals of the United States of America as following.
| COUNTRY | ELIGIBILITY |
|---|---|
| Iceland, Liechtenstein, Norway or Switzerland | Nationals and Permanent Residents |
| United States of America | Only Nationals(Not Permanent Residents) |
WHAT is Additional Buyers Stamp Duty(ABSD)?
ABSD is Government measures to curb the Real Estate Market for Residential Property which has been introduced in 2013. It had been revised many times, the recent ABSD rate in used are issued on 6 July 2018. Please refer to Table of ABSD Rates.
| Profile of buyer | ABSD Rates |
|---|---|
| SC^ buying 1st residential property | 0% |
| SC buying 2nd residential property | 12% |
| SC buying 3rd and subsequent residential property | 15% |
| SPR* buying 1st residential property | 5% |
| SPR buying 2nd and subsequent residential property | 15% |
| Foreigners (FR) buying any residential property | 20% |
| Entities buying any residential property | 25% Plus additional 5% for housing developer# (non-remittable) |
Remark:
^SC refers to Singapore Citizens
*SPR refers to Singapore Permanent Residents
#Housing Developers refer to entities in the business of housing development (i.e. construction and sale of housing units) with respect to the subject property acquired. (Note: This definition of Housing Developer is the condensed version. You may refer to paragraph (1) of Article 3 to the Stamp Duties Act for the full definition.)
All entities will be subject to the new ABSD rate of 25%. In addition, housing developers are subject to an additional non-remittable ABSD rate of 5% upon stamping, i.e. aggregate ABSD rate of 30%. Such developers may apply for upfront remission on the ABSD rate of 25% under the Stamp Duties (Non-Licensed Housing Developers) (Remission of ABSD) Rules and the Stamp Duties (Housing Developers) (Remission of ABSD) Rules3 (collectively referred to as “ABSD Housing Developers Remission”). Please refer to paragraph 4 for the application procedure to obtain the ABSD Housing Developers Remission.
Entities who are acquiring residential properties with no intention to undertake housing development of the subject property acquired should pay the ABSD rate of 25%.
Exceptional Case for ABSD Remission
It is important for the purchasing entity to decide whether it will undertake housing development of the subject property at the point of purchase, in order to ascertain the applicable ABSD treatment. Any subsequent change of intention will not be considered for stamp duty purposes. For example, entities who have paid the ABSD rate of 25% will not qualify for the ABSD Housing Developers Remission, even if they fulfil the remission conditions subsequently. Similarly, developers who paid the ABSD rate of 5% and applied for the ABSD Housing Developers Remission cannot withdraw their application subsequently. If they are unable to meet the remission conditions, the remitted ABSD of 25% will be recovered with interest.
All buyers / transferees (i.e. individuals, entities, housing developers) are required to complete the ABSD Declaration Form to be witnessed by their lawyers (if applicable). The completed form need not be submitted to IRAS, unless requested.