The Inland Revenue Authority of Singapore (IRAS) issued a revised e-Tax guide on 13 July 2015 to provide more details on the refinements to the mergers and acquisitions (M&A) scheme as recently stated in the Budget 2015. The complete e-Tax guide is available on the IRAS website.
Under the scheme a Singapore company making a qualifying acquisition of ordinary shares of another company may, subject to conditions, enjoy the following tax benefits: (i) mergers and acquisitions allowance on the purchase consideration (ii) stamp duty relief on the sale agreement or instrument of transfer; and (iii) a double taxation deduction on transaction costs incurred in respect of the qualifying share acquisition.
- A new shareholding eligibility threshold of 20% was introduced with effect from 1 April 2015, whereby share acquisitions qualify for M&A tax benefits if they result in the acquiring company owning 20% of the ordinary shares of a target company, but not more than 50%. Also, some specific conditions need to be met.
- The 75% shareholding threshold was removed from 1 April 2015.
- The option for a 12-month look-back period in a step acquisition was removed with effect from 1 April 2015. For Singapore companies that started step acquisitions before 1 April 2015 the election option is allowed during the 1-year transitional period from 1 April 2015 to 31 March 2016.
