POLICY STANCE ON “99-TO-1” ARRANGEMENTS FOR STAMP DUTY PAYMENT IN PROPERTY TRANSACTIONS AND MEASURES TO PREVENT RECURRENCE

Murali Pillai
4 min readMay 8, 2023

Together with 4 other parliamentary colleagues, I filed a Parliamentary Question on the cases involving the “99-to-1” property purchase arrangements to avoid ABSD. I sought details to understand the prevalence of this practice and what steps IRAS intends to take to address the problem of tax avoidance and evasion by the purchases. My PQ and SMS Chee Hong Tat’s answer may be accessed below.

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Mr Murali Pillai asked the Deputy Prime Minister and Minister for Finance (a) how many cases suspected to be structured in a “99-to-1” manner to avoid Additional Buyer’s Stamp Duty (ABSD) are being investigated by IRAS; (b) what is the estimated aggregate amount of ABSD that is avoided as a result of these suspected transactions; and © whether IRAS also investigates the role of facilitators to the purchase transactions with a view to establishing whether they have abetted the buyers to avoid ABSD.

The Senior Minister of State for Finance (Mr Chee Hong Tat) (for the Deputy Prime Minister and Minister for Finance):

[….] When a residential property is jointly purchased by two or more buyers, the Additional Buyer’s Stamp Duty (ABSD) rate arising from the buyer with the highest ABSD profile will apply on the entire value of the purchase. Hence, when a single purchase is split up into two or more steps to reduce the tax payable, the Commissioner of Stamp Duties is empowered under section 33A of the Stamp Duties Act to disregard the individual steps and assess stamp duty as a single joint purchase and to recover the rightful amount of ABSD due.

The “99-to-1” property purchase arrangements typically involve individuals without any prior property count buying, residential properties in their name initially and then within a very short period of time, selling the 1% interest to another individual who has a higher ABSD profile.

From 2018 to 2021, about 0.5% of private residential properties transacted involved such “99-to-1” or similar arrangements, where the owners sold a partial interest in their property to another buyer within a short period of time. The buyers were typically spouses or other immediate family members, with a higher ABSD profile, but with the ability to secure financing for the property. By structuring the transaction in this manner, the parties involved have effectively reduced the ABSD on the purchase of the property.

Individuals may enter into various property purchase arrangements for different reasons, both tax and non-tax-related. IRAS adopts a risk-based approach to detect and enforce against non-compliance and tax avoidance.

As part of its surveillance efforts, IRAS detected a small but rising number of “99-to-1” arrangements in recent years. It has therefore initiated audits of such transactions to better understand the circumstances of each case and ensure that buyers fulfil their rightful stamp duty obligations.

Whether a “99-to-1” arrangement involves tax avoidance depends on the facts and circumstances surrounding the specific case. Should IRAS determine that tax avoidance has occurred, it will recover the rightful amount of stamp duty from the buyers and may impose a 50% surcharge on the additional stamp duty payable. There is no statutory time limit for stamp duty audits.

As these “99-to-1” arrangements make up a very small proportion of the overall residential property market transactions, their impact on the residential and mortgage markets in Singapore is not significant.

Other than the buyers, the Government also takes a serious view against individuals who promote or facilitate such tax avoidance arrangements. IRAS will refer those identified of doing so to the relevant regulatory agencies. In the case of property agents, which Members asked about, IRAS will refer them to the Council for Estate Agencies (CEA) for investigation and disciplinary action in accordance with CEA’s Code of Ethics and Professional Client Care. Depending on the severity of the breach, agents may face financial penalties and/or suspension of their registrations.

IRAS takes a firm stance against tax evasion and avoidance. The large majority of taxpayers are compliant and pay the taxes that are due. We thank them for their contributions to our fair and progressive system of taxes and transfers, where individuals with greater means will contribute more and those who are vulnerable and earn lower income will receive more help.

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Murali Pillai

Member of Parliament, Bukit Batok SMC, Advisor to Bukit Batok SMC GROs.