A
game-changing corporate structure was recently put on the map for fund managers
in the Asia-Pacific region. In January of 2020, the Variable Capital Companies Act came into force. This forward-thinking
piece of legislation exists to boost Singapore’s fund management industry
through variable capital companies, otherwise known as VCCs.
If
you’re unfamiliar with Singapore VCCs, or simply want to learn more, you’re in
the right place. In this article, we’ll explore 5 key benefits of setting up a
Singapore VCC.
1. Greater Flexibility
VCCs
enjoy various beneficial tax treatments provide a high level of
flexibility when it comes to both distribution and return of capital assets. VCCs
can incorporate new funds as well as re-domicile existing funds.
In
addition, a VCC can be used for both open-ended and closed-ended funds, making it
a flexible choice for issuing and redeeming shares.
2. Improved Tax Efficiency
VCCs enjoy various beneficial tax treatments. For example:
- whether the VCC is structured as a non-umbrella or umbrella fund, the VCC will be recognized as a single entity when it comes to filing income tax returns;
- when distributions are made by a VCC in Singapore, distributions are generally tax exempt from Singapore income tax in the hands of its shareholders;
- as any company, the VCC itself is subject to income tax in Singapore. However, the tax exemption regimes governed under sections 13O (“Singapore Resident Fund Scheme”) and 13U (“Enhanced-Tier Fund Scheme”) of the Income Tax Act of Singapore are extended to VCCs.
3. Privacy
A potentially overlooked benefit to setting up a Singapore VCC is the privacy afforded to its shareholders.
While financials and tax statements do need to be filed, the identity of the shareholders is kept anonymous from the public.
4. Stability
As
a business-friendly country, Singapore has one of the most stable economies in
the world. To that end, setting up a VCC in Singapore provides a level of
stability that can be difficult to find elsewhere across the globe.
Singapore’s
infrastructure provides a stable and transparent hub by which wealth managers
can safely do business in Singapore’s open economy.
5. Future Opportunities
A
final benefit to setting up a Singapore VCC relates to the potential evolution
of requirements as set out under the existing legislation.
As
markets become more familiar with VCC structuring, collaborative aspects of the
fund will be brought to light. This will lead to future growth, additional
partnerships, and ultimately attract a steady flow of capital further advancing
Singapore’s position in the global financial markets.
Ready to set up a Singapore VCC?
Look no further! Our team at Auptimate is here to provide a unique experience for professional investors. We’re able to help you design, launch, and operate a number of investment vehicles.
From fund administration to tax filing, we are here to help guide you through it all. Whether you’re looking to set up a standalone VCC or an umbrella fund, the team at Auptimate is here to help.
If you’re ready to start setting up your next investment vehicle, or are simply looking for additional information, get in touch with our team here. We can’t wait to hear from you.