Tax, restructuring & litigation
Valuation for tax, transfer pricing and disputes
These are the engagements where the valuation will be read by someone hoping to find a flaw in it. The work is the same discipline as any other valuation, applied with the assumption that every input will be tested.
- Typical users
- IRAS, tax advisers, legal counsel, arbitrators, courts, opposing experts
- Engagement types
- Share transfer support, transfer pricing, restructuring, expert witness, damages quantification
- Standard of value
- Market value or fair value, set by the statute, contract or court direction that applies
- Documentation
- Full working papers retained; model and sources available for inspection
- Independence
- Expert duty to the tribunal takes precedence over the instructing party
Share transfers and IRAS stamp duty
Stamp duty on a transfer of shares in a Singapore company is charged at 0.2% on the higher of the consideration and the value of the shares transferred. Because duty is assessed on the higher figure, a transfer at nominal or nil consideration — between family members, into a trust, or as part of a group reorganisation — does not escape duty. The value of the shares still has to be established.
How the value is arrived at
- For a company incorporated within the last 18 months and not owning property, the allotment price of the shares is generally accepted
- For other private companies, net asset value per share derived from the latest audited or management accounts is the usual administrative basis
- Where the company owns property, management accounts reflecting the market value of that property as at the date of the transfer instrument are required, certified by a director or the secretary
- Where different classes of shares exist, the value attributable to each class has to be determined separately, reflecting the rights attached to it
Where an independent valuation earns its place
Net asset value is an administrative convenience, not a statement of what a business is worth. For a profitable services company with few tangible assets, NAV can sit far below market value; for a company carrying assets at historical cost, it can sit far above. Where the transaction is material, where the parties are related, where the company holds property or unlisted investments, or where NAV would produce a result the parties cannot commercially accept, a proper market value assessment is the safer basis — and it is the document you want on file if the assessment is later queried.
Timing matters. Duty is payable within 14 days of execution where the instrument is signed in Singapore, and within 30 days where it is signed overseas and then received here. Late stamping attracts penalties. Valuation support should therefore be scoped before the instrument is executed, not after the deadline has started running.
Transfer pricing and related party transactions
Transfers of assets, equity interests, intellectual property and business functions between related entities have to be priced as though the parties were independent. Valuation supports that in several places: pricing an intragroup transfer of shares or a business line, valuing intangibles migrated between jurisdictions, supporting royalty rates by reference to the economics of what is being licensed, and quantifying exit charges on business restructurings.
We prepare this work in line with OECD transfer pricing guidance and local practice, and structure the analysis so that it can sit inside transfer pricing documentation without rewriting. Where a group is filing in multiple jurisdictions, consistency of assumptions across those filings is itself a risk area, and a single valuation basis across the group is easier to defend than several.
Restructuring, insolvency and recovery
- Solvency and viability assessments supporting a restructuring proposal
- Valuation of businesses and assets in schemes of arrangement and creditor negotiations
- Going concern value compared against orderly liquidation and forced sale outcomes
- Valuation of distressed assets and identification of value-preserving strategies
- Support for administrators, liquidators and secured creditors on realisable values
Shareholder disputes and expert witness work
When shareholders separate, the valuation is the dispute. Minority oppression claims, buy-out orders, deadlock provisions in shareholders’ agreements, partnership dissolutions and matrimonial proceedings all turn on what a shareholding is worth — and on the two questions that generate the most argument: the valuation date, and whether discounts for lack of control and lack of marketability should apply at all in the circumstances.
What we provide
- Independent expert reports prepared for use in court or arbitration, in the form the tribunal requires
- Quantification of damages and loss of profits, including counterfactual modelling of what would have happened absent the alleged conduct
- Critique of an opposing expert’s report, identifying methodological weaknesses and testing the sensitivity of their conclusion
- Valuation evidence for matrimonial proceedings involving business interests
- Expert support to financial market regulators and in regulatory proceedings
- Attendance at hearings, and participation in expert conferrals where directed
On the expert’s duty. An expert’s primary obligation is to the court or tribunal, not to the party paying the fee. We accept instructions on that basis, and we say so in writing at the outset. A report that reads as advocacy is worth less than no report at all, because it damages the case it was meant to support.
Additional detail is on the main site at litigation and tax compliance.
Estate, succession and internal transfers
Valuations of private company shareholdings are also needed for estate administration, succession planning, family constitution arrangements, trust settlements, employee buy-ins under a share scheme, and buy-sell agreements triggered by death, retirement or departure. In each case the mechanism in the underlying document usually dictates the basis of value — and where that document says something ambiguous, the ambiguity is worth resolving before the event rather than after it.
Frequently asked questions
Do I need a professional valuation for stamp duty on a share transfer?
Not in every case. For a recently incorporated company with no property, the allotment price is generally accepted, and for many private companies net asset value from the latest accounts is used as an administrative basis. A professional valuation becomes worthwhile where the company holds property or unlisted investments, where the parties are related, where the amounts are material, or where net asset value would produce a figure that clearly does not reflect what the business is worth.
Is stamp duty payable if shares are transferred as a gift?
Generally yes, because duty is charged on the higher of the consideration and the value of the shares. A transfer at nil or nominal consideration is still assessed against the value of the shares transferred. Certain trust arrangements that do not change beneficial ownership are treated differently, so the specific structure needs checking with a tax adviser.
What valuation date applies in a shareholder dispute?
It depends on the basis of the claim and any mechanism in the shareholders' agreement or constitution. Candidates include the date of the conduct complained of, the date proceedings began, the date of the court order and the date of trial, and they can produce materially different figures. Where the date is contested, we commonly value at more than one date so that the tribunal has the evidence to decide the point.
Should minority discounts apply in a court-ordered buy-out?
It is one of the most argued issues in shareholder litigation and the answer is not automatic. Where the buy-out is a remedy for oppressive conduct, tribunals have often declined to apply a minority discount on the view that the seller is not a willing seller. Where the transfer arises under a contractual mechanism, the wording of that mechanism usually governs. The valuation report should set out the effect of the discount rather than presuming the legal answer.
Can you act as an expert witness in Singapore proceedings?
Yes. We prepare independent expert reports for court and arbitration, review and critique opposing experts' reports, and attend hearings. Instructions are accepted on the basis that the expert's duty is owed to the tribunal, which is stated in the report itself.
Facing a filing deadline or a dispute?
Describe the transaction or the proceedings and the date the valuation must speak to. We will confirm scope, independence and fee before any work begins.