Singapore has introduced a 35 per cent additional buyer stamp duty on the transfer of residential property into an inter vivos trust, with immediate effect.

The purpose of the charge, introduced on 9 May 2022, is to close a gap in the previous stamp duty rules. Under those rules, ordinary buyer's stamp duty (BSD) was payable when a residential property was transferred into a living trust and additional buyer's stamp duty (ABSD) was also payable depending on the profile of the beneficial owners of the residential property transferred into the trust. However, where the living trust was structured such that there was no identifiable beneficial owner at the time when the residential property was transferred into the trust, ABSD did not apply, so that the ABSD treatment for transfers of residential properties would be equal whether a trust was involved or not.

The new law states that, in such a case, ABSD at 35 per cent must now be paid in advance. However, refunds will be granted where the sale of residential property is to a trustee holding assets on trust for one or more identifiable individual beneficiaries. Testamentary trusts are also exempt.

The law does not operate retrospectively, applying only to instruments executed from 9 May 2022. However, it is not clear what will happen if a trustee of a pre-existing trust subsequently appoints assets to an identifiable beneficiary or distributes assets to any identifiable beneficiary. The Singapore tax authority might regard any documents involved as a stampable instrument, says law firm Withersworldwide.

The ABSD rate paid will vary depending on...