IRAS uncovered 166 cases of property purchases that involved the 99-1 loophole for tax avoidance
As the famous quote goes, “nothing is certain in this world except death and taxes”.
The current ABSD rates stipulate that foreigners buying any residential property in Singapore will have to pay an ABSD of 60% on any residential property purchase.
Singaporeans buying their second residential property will have to pay an ABSD rate of 20%, up from 17%. Those buying their third and subsequent residential property will have to pay an increased rate of 30%, up from 25%.
These hefty ABSD rates certainly got the brain juices flowing on creative methods to go around the tax regulations, which do not sit well with the taxman.
The Inland Revenue Authority of Singapore (Iras) has discovered 166 cases of private property purchases that involved tax avoidance as at April 2024, and about S$60 million in Additional Buyer’s Stamp Duty (ABSD) and surcharges will be clawed back.
On Tuesday (May 7), Deputy Prime Minister and Minister for Finance Lawrence Wong said the “99-to-1” arrangement is a tax avoidance arrangement used by some property buyers to reduce the rightful ABSD payable on the purchase of residential property.
In a written reply to a parliamentary question, Wong said: “When such property purchase arrangements are made to reduce the tax payable, the Commissioner of Stamp Duties is empowered… 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.”
As at April, Iras has completed the review of 187 such 99-to-1 cases, of which 166 cases were found to have involved tax avoidance.
Wong said: “Out of the 166 cases found to have involved tax avoidance, about 10 cases with evidence of potential involvement by property agents are currently under review by the Council for Estate Agencies.”
About 0.5 per cent of private residential properties transacted in the period from 2018 to 2021 involved 99-to-1 or similar purchase arrangements, where the owners sold a partial interest in the home to another buyer within a short period of time, then Senior Minister of State for Finance Chee Hong Tat said in Parliament last year.
(Source: The Business Times)
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