Is There Stamp Duty on Transferring Shares?

Item 16 of Schedule 1 to the Stamp Duties Act (Chapter 117) charges duty on transfers of marketable securities or rights to the issue of shares, and directions as to the issue or allotment of shares. Duty is payable by the purchaser, transferee or donee.

Ordinary share transfers: 1%

A transfer of marketable securities — other than to the extent it is a land use entitlement marketable security assessable under item 16A — attracts 1% of the value, or K0.10, whichever is greater.

Land-holding shares: the property scale

This is the provision that surprises people. Where the transfer is of land use entitlement marketable securities, the rates are the same as for real property:

Acquiring an interest in a landholding private corporation

Division 10A (sections 78A onwards) deals with acquisitions of interests in private corporations, and item 16A of Schedule 1 charges duty on the acquisition of an interest in a landholding private corporation. Section 78J defines a relevant acquisition.

The practical point for anyone buying into a PNG company that holds land: the duty question is not answered by looking at the share transfer form alone. Get advice on Division 10A before the transaction is structured.

How shares are valued

Section 15 governs the valuation of marketable securities. As with property, duty is charged on value, and a nominal price stated on a transfer does not settle the matter. Section 20 gives the Collector power to assess.

The machinery

• Division 9 (sections 69–73A) — transfers of marketable securities and directions as to the issue or allotment of shares. Sections 73 and 73A deal with an issue or allotment of shares by direction, so duty is not avoided by having new shares issued to a nominee instead of transferring existing ones.
• Division 10 (sections 74–78A) — duty on sales and purchases of marketable securities, with obligations on brokers and dealers to keep records (section 75) and lodge returns and pay duty (section 76), an endorsement requirement (section 77), recovery (section 78) and a rebate (section 78A).

Two provisions that bite on company registers

Section 71 deals with unstamped transfers of shares, and section 72 with the title of the transferee. This is where an unstamped transfer causes real commercial trouble: the company secretary is faced with a transfer that has not been duly stamped, and section 19 makes an unstamped instrument inadmissible in civil proceedings.

Exemptions

Item 16 exempts, among other things, transfers of marketable securities made in pursuance of duly stamped deeds of settlement or deeds of gift, and transfers to beneficiaries under wills or in pursuance of letters of administration of a deceased estate. See gifts and deceased estates.

Note also section 9: stock certificates and similar instruments are not liable to stamp duty.

Company reconstructions

Section 68A deals with company reconstructions, and item 15B of Schedule 1 with a company reconstruction transfer of property. Group restructures are a recognised category with their own treatment — another reason to take advice before moving assets between related companies.

Note that duty on company constitutions (section 68, item 4) was abolished from 1 January 2008 by section 100. Incorporating a company no longer attracts that duty. See abolished duties.