The
Stamp Duty (Exemption) (No. 11) Order 2021 [P.U.(A) 367/2021] (‘
Exemption Order’) which exempts qualifying instruments of loan or financing agreements relating to the restructuring or rescheduling of loans or financing between borrowers or customers and financial institutions was gazetted on 15 September 2021 and is deemed to have come into operation on
1 July 2021.
For the purposes of the Exemption Order, “
restructuring or rescheduling” means any modification made to the existing repayment terms and conditions of a loan or financing agreement pursuant to a concession provided by a financial institution
1 due to the inability of the borrower or customer to comply with the existing repayment schedule consequent to deteriorating financial conditions.
To qualify for the exemption, the following conditions must be fulfilled –
In respect of the condition set out in sub-paragraph 4, it should be noted that any increase in the loan or financing from the original amount provided under the existing instrument of loan or financing agreement will disqualify the instrument or agreement from stamp duty exemption under the Exemption Order. However, any interest or profit accrued from the restructured or rescheduled payments is not considered as an element of additional value to the original amount of the loan or financing under the existing instrument of loan or financing agreement.
Comments
The exemption from stamp duty under the Exemption Order is a continuation of measures introduced under the
Stamp Duty (Exemption) (No. 2) Order 2020 [P.U.(A) 165/2020], as amended and extended by the
Stamp Duty (Exemption) (No. 2) 2020 (Amendment) Order 2021 [P.U.(A) 27/2021]. This initiative will greatly assist businesses which are seeking to restructure or reschedule their existing loans or financing due to continuing financial difficulties arising from the Covid-19 pandemic.
However, it is to be noted that in order to qualify for stamp duty exemption under the Exemption Order, an applicant must satisfy the Stamp Office that the restructuring or rescheduling of the repayment terms and conditions under an existing instrument of loan or financing agreement is due to the applicant’s inability to comply with the existing repayment schedule in consequence of the deteriorating financial conditions.
Alert prepared by Lee Ai Hsian (Partner) and Tai Kean Lynn (Associate) of the Banking and Finance Practice of Skrine.