Singapore was already a good place to domicile a fund, and it’s just getting better.
Historically, international funds were domiciled in nations that were considered favourable from a tax perspective. The Cayman Islands especially has been popular. However, in recent years there has been more and more government initiatives to counter aggressive tax planning strategies -- often characterised by the mainstream press as tax evasion -- that utilize offshore tax havens. In Asia, more investors look to Hong Kong or Singapore as a base for their funds, but with Hong Kong going through a period of uncertainty, Singapore is coming out ahead as a clear leader.
Regulatory changes are helping Singapore as well. The Singapore Variable Capital Company (VCC) Bill that passed Singapore’s parliament WHEN? and is going through MAS consultation creates an easier way for Funds to set their domicile as Singapore. Corporate entities for any investment funds were traditionally created using a company, limited partnership, or unit trust structures, which all have their positives and negatives.A VCC is a new entity class for investment funds with relaxed capital rules favourable to the fund management industry. It can be used by both open-ended and closed-ended investment funds, and due to its variable capital structure, it allows easier flow of capital back to investors. It can also be a standalone structure or may have sub-funds underneath an umbrella fund. As a standalone structure, the VCC will receive the same tax treatment of a traditional Singapore company - including any tax incentive schemes.The major requirements for setting up a VCC in Singapore include the following:
- Fund managers need to be registered, licensed, or exempted by MAS
- Have a Singapore registered office
- Have a company secretary
- Have a Singaporean director or nominee director
- Undergo annual audits by a licensed, Singapore-based auditor
With Singapore’s favourable tax treatment, in addition to the progressive business landscape, and with the introduction of the VCC entity structure, it’s fair to say there’s never been a more favourable time to operate an entity or fund in Singapore. There are many intricacies of setting up this structure, but Lanturn is equipped to help set up and maintain your fund utilising the VCC structure. So please get in touch if you’d like to know more.