Singapore offers a highly conducive environment for companies that are looking at new opportunities in the Asia region. Its robust regulatory framework, coupled with a stable political and economic structure, pro-business government and a well-established judicial system, have created the ideal platform for investment and made it a major commercial, financial- and wealth management hub.
Singapore is recognised for its high government efficiency and competitiveness while its robust legal and regulatory regimes make it the most transparent country in Asia. The World Bank and other organisations consistently rank Singapore as the easiest place to do business worldwide. In addition, it has a highly educated and skilled workforce that speaks excellent English as well as multiple Asian languages.
With one of the lowest corporate tax rates in the region (17%), on top of a host of other tax schemes and incentives, Singapore is one of the best countries in Asia from which to grow a business. Corporate tax on foreign-sourced dividends, foreign-sourced branch profits and foreign-sourced service income into Singapore can be minimised, if not completely exempted, provided certain conditions are met.
With over 80 double tax treaties, Singapore has one of the most comprehensive networks in the world. Singapore residents can therefore benefit from reduced rates of withholding tax on the repatriation of profits from cross border investments. The absence of tax on capital gains and the lack of withholding tax on dividend payments to non-residents makes setting up a company in Singapore an excellent solution for a holding company for cross border investments.
To further develop Singapore as a full-service international fund management hub, the Monetary Authority of Singapore (MAS) and the Accounting & Corporate Regulatory Authority (ACRA) launched the new Variable Capital Companies framework in January 2020.
The new Singapore Variable Capital Company (VCC) is a corporate vehicle specifically tailored for investment funds that will enhance the options available for Singapore fund managers to structure and establish funds in Singapore. It is designed to offer more flexibility to investment funds than standard vehicles – Singapore companies, limited partnerships and unit trusts – through the use of an umbrella-sub-fund structure and less rigid capital maintenance requirements.
Some traditional fund structures can be hindered in respect of diversification because they are constrained by a single investment objective. One of the VCC’s key features is that it can be set up either as a stand-alone single fund or as an ‘umbrella entity’ with multiple sub-funds that may have different investment objectives, investors and assets and liabilities.
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