Stamp Duty Exemption on Extended Eligible Loan Restructuring / Rescheduling Agreements

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The Stamp Duty (Exemption) Decree (No.11) 2021 [P.U.(A) 367/2021] (‘Exemption order‘) which exempts eligible instruments from loan or financing agreements relating to the restructuring or rescheduling of loans or financing between borrowers or customers and financial institutions was published in the Official Journal on September 15, 2021 and is deemed to be entered into force on July 1, 2021.

For the purposes of the exemption order, “restructuring or rescheduling”Means any modification made to the existing repayment terms of a loan or financing agreement under a concession granted by a financial institution1 due to the inability of the borrower or client to meet the existing repayment schedule due to deteriorating financial conditions.

To benefit from the exemption, the following conditions must be met:

  1. An exemption request must be submitted;
  2. The loan instrument or financing agreement relating to the restructuring or rescheduling of a loan or financing between a borrower or a client and a financial institution must be executed from July 1, 2021 but no later than December 31, 2021;
  3. The existing loan instrument or financing agreement has been duly stamped under Section 22 or Section 27 of the First Schedule of the Stamp Act 1949;
  4. The loan instrument or financing agreement relating to the restructuring or rescheduling of a financing loan must not contain the element of value added to the original amount of the loan or financing under the loan instrument or the existing financing agreement; and
  5. The exemption request must be accompanied by the relevant document relating to the restructuring or rescheduling of the loan or financing concerned.

Regarding the condition in paragraph 4, it should be noted that any increase in the loan or funding over the original amount foreseen under the existing loan instrument or funding agreement will result in disqualification. of the instrument or agreement of the stamp duty exemption under the exemption order. However, any interest or profit accrued on restructured or rescheduled payments is not considered an additional item of value over the original amount of the loan or financing under the existing loan instrument or financing agreement.

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The exemption from stamp duty under the exemption order is a continuation of the measures introduced under the Stamp Duty (Exemption) Decree (No. 2) 2020 [P.U.(A) 165/2020], as amended and extended by Decree on stamp duty (exemption) (n ° 2) 2020 (amendment) 2021 [P.U.(A) 27/2021]. This initiative will go a long way to help companies looking to restructure or reschedule their existing loans or financing due to the lingering financial difficulties resulting from the Covid-19 pandemic.

However, it should be noted that in order to qualify for a stamp duty exemption under the exemption order, an applicant must prove to the stamp office that the restructuring or rescheduling of repayment terms under a existing loan instrument or financing agreement is due. the inability of the applicant to meet the existing repayment schedule due to deteriorating financial conditions.


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