Singapore Asset Management Industry has grown by more than 5% to S$3.4 trillion in 20181 according to Monetary Authority of Singapore. One of its key success factors lies in the certainty of tax treatment and business friendly tax regime including having an attractive income tax rate of 17%.

A typical fund structure comprises of at least a Fund Management Company (“FMC”) and a fund as the investment pooling vehicle and investors. A fund is prima facie carrying on a business of trading in investments and in the absence of a tax incentive, the income arising from these investments will generally be chargeable to income tax.

Funds have a choice of investment vehicles including a Limited Partnership, a Trust, a Corporate entity and the new Variable Capital Company (“VACC”). There is currently a grant for funds wishing to set up as a VACC where the Monetary Authority of Singapore (“MAS”) will co-fund up to 70% of the eligible expenses incurred on incorporating or registering a VCC, paid to Singapore-based service providers. The grant is capped at S$150,000 for each application, with a maximum of three VCCs per FMC.

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