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Singapore: Recent property tax targets the super-wealthy

July 5, 2022

Singapore has introduced additional property taxes, which analysts say are aimed at the super-wealthy who buy houses using non-transparent structures to avoid paying such fees.

The authorities are imposing an additional 35 per cent buyer's stamp duty on houses settled into trust with no identifiable beneficial owner.

The recently enacted tax is intended to close a loophole used by individuals who purchase multiple properties under a trust where it is not clear who the beneficial owner is and therefore avoid additional taxes. This opinion was expressed by analysts from APAC Realty Ltd., a division of ERA and Cushman & Wakefield Plc.

“The new regulation targets the high-net-worth individuals,” said Nicholas Mack, the head of the research department at ERA.

Singapore is levying more fees on the wealthy to allay concerns about inequality in the city-state. In February, the government announced higher taxes on certain types of income, property and luxury cars.

Known as one of the best in the world, Singapore's housing market has exploded in the past year, with prices rising even more than in the past decade. According to Knight Frank Singapore, sales of luxury bungalows - the city's equivalent of mansions - have tripled in 2021.

Nicholas Mack said the latest government move could deter some investors from buying houses in the city-state. “As more wealthy people come to Singapore, they can use non-transparent structures to buy residences to avoid additional stamp duty,” he said.

In response to Bloomberg queries, Treasury officials said they had no data on the transfer of houses to the ownership of trusts, in which additional fees were not charged. The announced extra tax is “intended to ensure a stable and sustainable residential real estate market”, and its introduction is associated with a periodic review of government policy, the report says, therefore also answering questions about whether the move can be seen as a restriction on people breaking the rules.

In Singapore, a home buyer must pay stamp duty when transferring property to a living trust, and additional taxes are levied depending on the owner's profile. But until a recent amendment, there was no extra tax if the property was placed in a trust that did not have an identifiable beneficial owner.

Under the new rules, buyers can receive a tax refund if the identities of the beneficiaries are known, and the amount matches the tax profile of the owner.

If you need more detailed information on this issue, please do not hesitate to contact qualified specialists. To contact our company's experts, use any communication channel posted on our website. We are waiting for your requests!

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