Stamp duty exemption on qualifying refinancing/ restructuring agreements
22 May 2020
The Stamp Duty (Exemption) (No. 2) Order 2020
(‘Exemption Order’) was gazetted on 21 May 2020 and came into operation retrospectively on 1 March 2020
The Exemption Order exempts from stamp duty for qualifying loan or financing agreements relating to the restructuring or rescheduling of existing business loans or financing.
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
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 –
- An application must be submitted for the exemption;
- The loan or financing agreements instrument relating to the restructuring or rescheduling of a business loan or financing must be executed between a borrower or customer and a financial institution on or after 1 March 2020 but no later than 31 December 2020;
- The existing loan or financing agreements must be duly stamped under item 22 or item 27 of the First Schedule to the Stamp Act 1949; and
- The application for exemption must be accompanied by an offer letter from the financial institution to the borrower or customer for the restructuring or rescheduling of the relevant loan or financing.
This measure will greatly assist businesses which are seeking to restructure or reschedule their existing business loans or financing due to financial difficulties arising from the economic downturn caused by the global outbreak of 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 loan or financing agreement is due to the applicant’s inability to comply with the existing repayment schedule as a result of deteriorating financial conditions.
For the purposes of the Exemption Order, a ‘financial institution’ has the meaning assigned to “banker” under section 2 of the Stamp Act 1949.