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STAMP DUTY EXEMPTION – (FOR RELATED ENTITES)

by | Nov 30, 2021

Stamp Duty is a tax chargeable on any instruments specified in the Schedule to the Stamp Duty Act, CAP 480 (‘’the Act’’).

The Act has however taken into consideration and provided for exemptions through which parties can legally reduce the Stamp duty payable significantly or in its entirety. Some of the exemptions provided for in the Act include:

  1. Exemption for first time home buyers;
  2. Exemption for first time home buyers under the Affordable Housing Scheme;
  3. Exemption for the transfer of real property between husband and wife
  4. Exemption for instruments/transactions if the Cabinet Secretary (for matters related to Finance, in this case ‘the National Treasury’) deems it would be in the public interest to exempt such instruments/transactions;
  5. Exemption provided for under Section 117 of the Act;
  6. Exemption of building societies’ documents from stamp duty; and
  7. Exemption in relation to transfers between associated Companies.

In this article, we shall examine exemptions provided for in relation to transfers between associated Companies and the procedure for obtaining such an exemption.

Stamp duty exemption in relation to transfers between associated Companies is provided for under Section 96 of the Act. However, the Collector of Stamp Duty has to be satisfied that the effect is to transfer a beneficial interest in property from one Company to another and that one of the Companies is a beneficial owner of not less than 90% of the issued share capital of the other Company.

Application for exemption of stamp duty by virtue of transfer between associated Companies should be submitted to the Collector of Stamp Duties at the Ministry of Lands accompanied by:

  1. A cover letter providing a brief of the transaction and the Section of the Act being relied on;
  2. A Statutory declaration;
  3. An executed Share Transfer Form;
  4. Board Resolutions approving the transfer of share;
  5. The Stamp duty adjudication form; and
  6. Supporting documents confirming the compliance status of the Companies and their particulars.

Applications submitted to the Collector may take between 3 to 7 days to render a decision on exemption.