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Extension of stamp duty exemption on the instrument of loan or financing agreement relating to the restructuring or rescheduling of a business loan or financing executed between a borrower or customer and a financial institution (FI)
The Stamp Duty (Exemption) (No. 2) Order 2020 [P.U.(A) 165], gazetted on 21 May 2020, provides a stamp duty exemption on the instrument of loan or financing agreement relating to the restructuring or rescheduling of a business loan or financing between a borrower or customer and a financial institution (FI), which is executed between 1 March 2020 and 31 December 2020 (see Special Tax Alert No. 15/2020). The exemption is not automatic and must be applied for.
Following the above, the Stamp Duty (Exemption) (No. 2) 2020 (Amendment) Order 2021 [P.U.(A) 27] was gazetted on 25 January 2021. The Amendment Order provides that:
(a) The exemption will be extended to instruments of loan or financing agreements executed by 30 June 2021 (previously 31 December 2020).
(b) The exemption will apply to instruments of loan or financing agreements of loan or financing between a borrower or customer and an FI (previously restricted to business loan or financing).
(c) The exemption is subject to the following conditions:
- The existing instrument of loan or financing agreement has been duly stamped under Item 22 or 27 of the First Schedule of the Stamp Act 1949 (per P.U.(A) 165/2020), and
- The instrument of loan or financing agreement relating to the restructuring or rescheduling of a loan or financing does not contain the element of additional value to the original amount of loan or financing under the existing instrument of loan or financing agreement* (additional condition outlined in the Amendment Order).
*Excludes any interest or profit accrued from the restructured or rescheduled payments
(d) The application for the exemption will have to be accompanied by the relevant documents relating to the restructuring or rescheduling of that loan or financing (previously, the application had to be accompanied by a letter of offer from the FI).
The Amendment Order is deemed to have come into operation on 1 March 2020.