ABSD: Case of not all foreigners being equal...

Citizens of five countries that have free trade deals with Singapore, including the United States and Switzerland, will be treated as Singaporean for the purposes of the new stamp duty measures.

When they buy a private home, Americans, Swiss and nationals from Liechtenstein, Norway and Iceland will be treated the same as Singapore citizens, the taxman said in a guide on Wednesday.

This will enable them to avoid the new 10% additional buyer's stamp duty that foreigners now have to pay when they buy a private home.

Free trade agreements usually ensure that a country's citizens are accorded certain trade protections when they are in the partner nation.

The Additional Buyer's Stamp Duty (ABSD), as the new levy is called, was announced by the Government on Wednesday and hits foreigners hardest. They have to pay an additional stamp duty of 10% when buying a home.

But the foreigners from the five countries can apply for remission or a relief.

The Inland Revenue Authority of Singapore (Iras) website says they must provide identification, acceptance to option to purchase/sale, the purchase agreement and the ABSD declaration form.

Under the new rules, permanent residents (PRs) buying a second and subsequent property will pay an additional 3% stamp duty, while Singaporeans buying their third or subsequent homes must pay an extra 3%.

The rule is also that for purchases made by two or more parties with mixed residency status, such as a Singaporean with PR, the higher rate will be imposed.

But Iras also gave examples of situations where remissions can apply. These are in cases where married couples have mixed residency status.

For example, a PR who currently owns a property while his Singaporean spouse owns none can apply for relief from the additional stamp duty when they co-purchase a home.

In another scenario, a PR and a Singaporean spouse co-own a property. When they next jointly buy a property, they can apply to be exempt from the 3% levy.

the relevant documents have to be submitted to Iras.

Relief will also be provided for qualifying developers.

Iras also said that people who want to downgrade from private housing to an HDB flat will be allowed a concessionary period to sell their private residential properties. The application for relief in such cases can be made through the HDB.

More details about relief schemes can be found in the ABSD e-Tax guide, which can be downloaded from www.iras.gov.sg/irasHome/page04.aspx?id=910

Source: The Straits Times

The wife and I wonders if the same courtesy will be accorded to us should we decide to buy a private property in... e.g. Liechtenstein, assuming the citizens there get preferential treatment over foreigners for property purchase.

We have not looked at the ABSD e-Tax guide (yet) but reading the Straits Times report, it sure sounds like citizens of the five countries that have free trade deals with Singapore are treated better than our PRs when comes to buying a second property....

Disclaimer: We are NOT according animal status to any nationality here.

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