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PLC Global Finance update for September 2010: Singapore
Practical Law UK Articles 6-503-4657 (Approx. 5 pages)
PLC Global Finance update for September 2010: Singapore
by Allen & Gledhill LLP
| Published on 01 Oct 2010 • Singapore |
The Singapore update for September 2010 for the PLC Global Finance multi-jurisdictional monthly e-mail.
Capital markets
SGX proposes short-selling disclosure rules and reporting of short sales volume
The Singapore Exchange (SGX) is proposing changes that will require investors who sell securities listed on the SGX to identify their sell orders as either short sell orders or normal sell orders.
A short sell order will be defined as "any sell order where the seller does not own the security to be sold at the time of placing the order". The sell orders are to be marked by investors. Brokers who are SGX Trading Members will need to put in place the requisite systems and procedures to facilitate the marking of sell orders.
This is a measure taken by the SGX to provide for better market transparency and enhanced accountability. With the data collected, the SGX proposes to publish on trading days short sales statistics for the preceding trading day.
Reference material
The proposed changes were outlined in a consultation paper issued by the SGX on 23 July 2010. Please click here to access the consultation paper from the SGX website.
Changes to price stabilisation exemption regime effective from 2 August 2010
Price stabilisation of securities that are listed or to be listed on Singapore Exchange Securities Trading Limited (SGX-ST) may contravene the false trading, securities market manipulation and insider trading prohibitions set out in the Securities and Futures Act. However, the Securities and Futures (Market Conduct) (Exemptions) Regulations 2006 (the Exemption Regulations) set out omnibus exemptions from such prohibitions for stabilising action taken in respect of these listed securities (the price stabilisation exemption regime).
Changes to price stabilisation exemption regime
On 2 August 2010, amendments were made to the Exemption Regulations to introduce the following changes to the price stabilisation exemption regime:
- Extending the scope of the Exemption Regulations to stabilising action undertaken in respect of new securities issued in a follow-on offering.
- Allowing stabilising action for securities other than bonds that are not undertaken on the SGX-ST, or an overseas securities exchange, subject to compliance with the conditions stipulated in the Exemption Regulations.
- Including commission, brokerage, transaction fee and levy in computing the offer price of securities for the purposes of the Exemption Regulations (for example; in setting the price limits at which stabilising action may be taken).
Amending the definition of "offer document" in the Exemption Regulations to clarify that stabilising action undertaken in respect of units of a registered business trust and a collective investment scheme falls within the scope of the Exemption Regulations, subject to compliance with the conditions in the Exemption Regulations.
Tax
MOF requests feedback on proposed changes to Stamp Duties Act to provide stamp duty relief for qualifying M&A
Following a press release on 6 August 2010, the Ministry of Finance (the MOF) conducted a public consultation on three proposed legislative amendments under the draft Stamp Duties (Amendment No. 2) Bill 2010. The public consultation closed on 19 August 2010.
The draft Stamp Bill implements a tax change announced in Budget 2010 as well as two non-Budget changes arising from the periodic review of the stamp duty regime.
Stamp duty relief for qualifying mergers and acquisitions
This tax incentive and the income tax allowance for qualifying M&As were announced in the 2010 Budget statement to support business restructuring. Under the scheme, acquirers can be granted up to S$200,000 of stamp duty relief per financial year for the acquisition of ordinary shares, subject to qualifying conditions. The MOF also released the draft Stamp Duties (Relief from Stamp Duty Upon Acquisition of Shares of Companies) Rules 2010 for comment. The draft rules will, among other things, contain the conditions for relief from ad valorem stamp duty on the acquisition of ordinary shares of a target company by an acquiring company. The legislative changes to implement this tax incentive will be deemed to have come into force on 1 April 2010.
Stamp duty remission
The proposed amendments will clarify that the Minister for Finance may impose conditions for any reduction or remission of stamp duty. The amendments will also provide that, if a person granted a reduction or remission does not comply with any of the conditions imposed, the government will be able to recover the amount of tax reduced or remitted as a debt. Penalties will apply for late payment of this debt.
Breach of stamp duty relief
Under the proposed amendments, when qualifying conditions for stamp duty relief (for example, for transfer of assets between associated entities) are breached, the stamp duty that was not payable earlier because relief was granted, must be paid within a month of the payment notice issued by the Commissioner of Stamp Duties. Failure to pay this will attract late payment penalties.
More details of these proposed changes are set out in the summary table on tax changes (see below).
Reference material
The following materials may be accessed from the MOF website (www.mof.gov.sg) by clicking on the provided links:
Parliament passes Goods and Services Tax (Amendment) Bill 2010: implementing Budget 2010 changes
The Goods and Services Tax (Amendment) Bill 2010 (the Bill) was read the second time in parliament and passed on 16 August 2010. The changes arising from the Bill are not in force yet. The Bill amends the Goods and Services Tax Act (the GST Act) to put in place tax changes announced in the 2010 Budget Statement, as well as changes arising from the ongoing review of the Goods and Services Tax (GST) regime. The following are highlights of some of the changes that will be made.
Budget 2010 changes
These changes are designed to reduce compliance costs for businesses:
- Time of supply and simplification of GST accounting rules. A business now need only account for GST when an invoice is issued or payment is received for the supply, whichever is the earlier. In this way, businesses need no longer track the delivery of goods and services for most transactions.
- Expand scope of zero-rating of GST for the marine and aerospace industry. The GST Act will be amended to provide for the enhancement to the zero-rating of supplies in connection with the marine and aerospace industry. GST zero-rating is extended to:
- pleasure and recreational ships wholly used for international travel;
- goods supplied for use, installation or for retail sale on all ships qualifying for the zero-rating treatment; and
- transportation of goods or passengers via a ship to or from international waters even if the ship does not call on a port outside Singapore (for example, cruise-to-nowhere packages).Zero-rating is also extended to stores and fuel supplied to and merchandises for retail sale on an aircraft qualifying for zero-rating treatment.
- New Import GST Deferment Scheme (the IGDS scheme). Currently, GST on imported goods is payable at their point of entry into Singapore. This new scheme allows approved businesses to defer import GST to the point of submission of their GST returns. In effect, approved businesses will enjoy a credit period of up to two months on their import GST, similar to what businesses can enjoy for their local purchases.
Other changes
- Approved Contract Manufacturer and Trader Scheme. For the purpose of enhancing international competitiveness, the ACMT scheme allows qualifying businesses to disregard the GST on value added services performed for their overseas clients even if the goods are treated or processed in Singapore. The ACMT scheme has been refined to allow qualifying businesses to self-assess the eligibility of their transactions under the scheme instead of having to seek the approval of the Inland Revenue Authority of Singapore.
- Electronic service. The GST Act will be amended to widen the scope of the electronic services provided by the Comptroller of GST. Currently, the GST Act allows the Comptroller to provide electronic services only for the filing or submission of returns, declarations or documents.
- Exemption of residential property from GST. Currently, the exemption of residential property from GST applies to buildings, flats and tenements that are used exclusively for residential purposes. The Act will be amended so that GST exemption is available to buildings, flats and tenements that are used principally for residential purposes. Examples of buildings, flats and tenements that are used principally for residential purposes are homes for the aged, workers' dormitories and students' hostels.
- MOF response. A draft version of the Bill was the subject of a public consultation conducted by the Ministry of Finance from 1 June 2010 to 18 June 2010. On 16 August 2010, the Ministry of Finance (the MOF) issued its response to the feedback received on the consultation paper.
To read the response from the MOF website, please click here.
Second reading speech
To read the Second Reading Speech delivered by Mrs Lim Hwee Hua, Minister in Prime Minister's Office, Second Minister for Finance and Transport, on the Goods and Services (Amendment) Bill 2010, please click here.