If a buyer’s or investor’s due diligence finds that your company’s past share transfers, leases or other dutiable documents were never stamped, the cost depends on timing and on whether you come forward. Stamped late but within 3 months, the penalty is S$10 or the duty, whichever is greater. After 3 months it rises to S$25 or four times the duty, whichever is greater. If the late stamping qualifies under IRAS’s Voluntary Disclosure Programme, IRAS says the penalty is instead reduced to 5% a year, calculated daily. Fix it before the deal closes, and before IRAS raises it.
Disclose before IRAS raises it. The difference between four times the duty and 5% a year is large. The reduced penalty applies only to disclosures that qualify under IRAS’s programme: made before IRAS queries the matter, complete, and paid.
Why this comes up in due diligence
A buyer, investor or lender’s lawyers will ask for evidence that past share transfers were stamped and that the company’s leases were stamped. Missing stamp certificates are common where:
- shares were transferred between founders or family members informally, sometimes for a nominal price
- a share transfer was registered with ACRA but the instrument was never stamped
- a lease or tenancy agreement for the company’s premises was signed but not stamped
- documents were signed overseas and brought into Singapore later
Unstamped instruments can create practical problems beyond the penalty. The buyer will usually require them to be stamped before completion, or an indemnity, or a price adjustment.
What the penalty will be
| Situation | Penalty (IRAS) |
|---|---|
| Stamped late, delay not more than 3 months | S$10 or an amount equal to the duty, whichever is greater |
| Stamped late, delay more than 3 months | S$25 or 4 times the duty, whichever is greater |
| Late stamping or underpayment disclosed under IRAS’s Voluntary Disclosure Programme | 5% of the late payment or underpayment for each year of non-compliance, calculated daily |
| Stamp duty avoidance arrangement disclosed under the programme | Flat 5% of the additional duty |
Sources: IRAS pages on late payment of stamp duty and the Voluntary Disclosure Programme e-Tax Guide. Unlike income tax and GST, there is no grace period for stamp duty. IRAS can also appoint agents to recover unpaid duty and penalties, and issue a travel restriction order against an individual who owes them.
Step by step
- Inventory the documents. Go through the register of members and transfer history, every lease and tenancy, and any other agreements that may be dutiable. Note the date each was signed and whether it was stamped.
- Work out the duty. For share transfers, duty is generally based on the higher of the price paid and the value of the shares, which needs a valuation of the company at the transfer date. For leases, it depends on rent and term. See our guides to stamp duty on share transfers and stamping tenancy agreements.
- Disclose and stamp. Stamp the documents through IRAS’s e-Stamping service and make the voluntary disclosure, explaining how the omission happened and what has changed.
- Pay the duty and penalty and keep the stamp certificates for the data room.
- Agree the cost in the deal. Decide with the buyer who bears the duty and penalty, and reflect it in the sale agreement.
Example
Example only, not a client case. Before selling the company, two founders find that a 2022 transfer of 30% of the shares from a departing co-founder was never stamped. The company’s value at the time supports duty of S$1,800. Stamped now without disclosure, the penalty could be four times the duty, S$7,200. As a qualifying voluntary disclosure, the penalty is 5% a year of the duty for the period it was late, a small fraction of that. The founders disclose and stamp before signing the sale agreement, and give the buyer the stamp certificate.
Frequently asked questions
Is an unstamped share transfer invalid?
Stamping is a tax obligation. Whether an unstamped document creates other legal problems, for example in evidence or registration, is a question for a lawyer. In practice, buyers and banks will insist it is stamped.
Who pays the duty on a share transfer?
Generally the transferee (the buyer of the shares), unless the parties agree otherwise. The person liable is also the one penalised for late stamping.
Does the same apply to unstamped tenancy agreements?
Yes. Leases and tenancy agreements are dutiable and subject to the same late-stamping penalties.
More on the tax and GST hub.
Found unstamped documents before a sale or investment?
If your company, or you as a shareholder, has share transfers or leases that were never stamped, contact the Raffles Corporate Services team at [email protected] or on WhatsApp at +65 8501 7133 or +65 9018 0072. We will review the registers and documents, value the shares where needed, calculate the duty and prepare the disclosure and stamping. Where the transaction raises legal questions, we will refer you to a firm on our panel of Singapore law firms. Raffles Corporate Services is a corporate services provider, not a law firm, and this article is general information, not tax or legal advice.
Kevin Yeo, Raffles Corporate Services