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VCCs: More Reasons to Domicile a Fund in Singapore

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Singapore is known to be a good place to domicile funds, and it just keeps getting better — especially with the new Variable Capital Company (VCC) bill. Read on for the tax regulations that make this island nation so attractive to VCs and private funds.

In general, international funds are domiciled in countries with favourable taxation policies. The Cayman Islands are popular for this reason. In Asia, investors typically look to Hong Kong or Singapore as a base for their funds. But, with Hong Kong going through a period of political uncertainty, Singapore is coming out ahead as a clear leader.

The VCC in Singapore

In recent years, there have been more government initiatives to aggressively counter tax reduction strategies — often denigrated by the mainstream press as a form of tax evasion — that utilise offshore tax havens. Yet, Singapore is bucking the trend with new regulatory changes. The Singapore Variable Capital Company (VCC) Bill has passed in Singapore’s parliament and will be fully in place by early 2020. When complete, it will be even easier for funds to domicile in Singapore.

Corporate entities for investment funds typically use company, limited partnership, or unit trust structures. Each has its merits and weaknesses. The VCC is a new entity class for investment funds, with relaxed capital rules that favour the fund management industry. It can be used by both open-ended and closed-ended investment funds. Due to its variable capital structure, it allows for an easier flow of capital back to investors. It can also be a standalone structure or have sub-funds under an umbrella fund.

VCC as a Standalone Structure

As a standalone structure, the VCC will receive the same tax treatment as a traditional Singapore company – including existing tax incentive schemes. The main requirements for setting up a variable capital company in Singapore are:

  • Fund managers need to be registered, licensed, or exempted by MAS
  • The entity must have a Singapore-registered office
  • The entity must have a company secretary
  • The entity must have a Singaporean director or nominee director
  • The entity must undergo annual audits by a licensed, Singapore-based auditor

Lanturn’s Incorporation and Fund Services

With Singapore’s favourable tax treatment, its progressive business landscape, and now the introduction of the variable capital company entity structure, there has never been a better time to set up an entity or fund in Singapore. There are many intricacies to the new VCC structure, but Lanturn is well-equipped to help set up and maintain your fund. 

Our comprehensive suite of services extends beyond fund formation and administration to cover incorporation and corporate secretarial support, ensuring all aspects of your business are in capable hands.

Do get in touch if you’d like to know more.

 

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