Understanding the Tax Framework for the Singapore Variable Capital Company

A Variable Capital Company (“VCC”) is a legal entity form for Singapore investment funds which can be set up as a single fund or an umbrella fund with 2 or more sub-funds, holding different assets.

On 28 August 2020, the Inland Revenue Authority of Singapore (IRAS) published public guidance regarding the tax framework for Singapore VCCs.

The VCC is a new form of legal entity for investment funds available under Singapore law with effect from 14 January 2020. It provides for the operation of multiple, segregated collective investment schemes (each a sub-fund) within a single legal entity. A VCC may be established as a single fund, or as an umbrella fund that comprises two or more sub-funds.

Key features

A VCC can pay dividends out of capital, not only out of profits
If permitted, members may also redeem or sell their shares back to the VCC in order to exit their investment.
A key advantage is the umbrella structure – sub funds can share a common board of directors and service providers e.g. fund managers.
Ring-fencing of sub-funds, i.e. assets and liabilities of each fund are segregated and each sub-fund can be wound up independently.
An overseas investment fund with structure comparable to that of a VCC can be redomiciled to Singapore by transferring the registration of the overseas investment fund to Singapore as a VCC.

How Mazars can help

Amid an evolving landscape of tax policies and legislation, our team of tax and legal experts can ensure you remain compliant. We offer the following services:

Assessment and application of relevant tax incentives for the VCCs.
Structuring the VCC and investments of each fund tax efficiently
Manage the complex corporation tax, transfer pricing and GST (registration/quarterly returns/ remission) compliance obligations of the VCCs and/or sub-funds