What are the Tax on Funds and Fund Managers in Singapore
For a number of years, Singapore has been a preferred location for setting up fund vehicles (“funds”) in the Asia Pacific region. This, in turn, has contributed to the growth of the fund management industry in Singapore.
There are several factors for the attractiveness of Singapore, such as the stability and business friendly environment. But not least, one important aspect is the attractive tax regime for funds and fund managers.In recent times, with the introduction of the OECD’s Base Erosion and Profit Shifting (“BEPS”) initiatives, many tax havens where funds were previously set up, are increasingly losing their gleam.
With this change in the global tax climate, coupled with efforts by the Singapore government to develop the fund management industry by allowing the re-domiciliation of foreign companies to Singapore, as well as introducing the Singapore Variable Capital Company framework, Singapore could be considered one of the foremost attractive locations for fund domiciliation and fund management.
What is the Tax Regime for Funds and Fund Managers?
When a Singapore based fund manager manages the investments of a fund, its activities could create a taxable presence in Singapore for the fund, regardless of whether the fund is onshore or offshore. Hence, income and gains derived by the fund may be considered as sourced in Singapore liable to tax in Singapore. The following tax incentive schemes can mitigate the Singapore tax liability of the fund, provided the conditions for the schemes are met.
Under the tax incentive schemes, certain “specified income” derived by the fund from “designated investments” is exempt from tax. The exemption covers income from a wide range of investments.
A broad overview of the three tax exemption schemes is described below. The outline of the schemes should not be treated as complete tax analysis or advice. We recommend that specific tax advice is obtained for any intended fund-related activities in Singapore.
Read more about tax on funds and fund managers in Singapore at InCorp Global.
