TAX IMPLICATIONS OF VCC COMPANY

TAX INCENTIVES FOR VCCs

As VCCs are to be used as investment funds, they would only be considered for the following tax incentives:

  1. S13X -Exemption of income arising from funds managed by fund manager in Singapore
  2. S13R -Exemption of income of company incorporated and resident in Singapore arising from funds managed by fund manager in Singapore
  3. S13H -Exemption of income of venture company

Tax Treatments Comparison between Company with VCC

VCC Company
Tax Residence
Location where the board directors meet to make strategic decisions
Location where the board directors meet to make strategic decisions
Level at which rule is applied for umbrella VCCs
COR application -VCC. Tax Incentives (13X, 13R & 13H) -VCC. GST Registration Liability -Sub-fund. Unabsorbed CA, losses and donations -Sub-fund. Shareholding Test -Sub-fund. Partial tax exemption, start-up tax exemption or corporate tax rebate -VCC. Exemption of gains or profits from disposal of ordinary shares -Sub-fund. Modification of provisions for VCCs redomiciled in Singapore -Sub-fund. Tax credits -Sub-fund.
Company level
S14A, 14B, 14K, 14KA, 14D,14DA,14E, 14F, 14H,14I,14N,14O,14P,14PA,14Q,14V,14WA,14ZB & 37L
Non-deductible
Deductible

Claiming GST on Expenses for Qualifying VCCs

To qualify for the GST remission, the VCC must:

  • satisfy the conditions for specific income tax concessions as at the last day of its preceding financial year; and
  • be managed or advised by a prescribed fund manager in Singapore.

Under the GST remission, qualifying VCCs will be able to recover GST incurred on expenses, with the exception of expenses disallowed under regulations 26 and 27 of the GST (General) Regulations. To ease compliance, the GST recovery is based on a fixed recovery rate.

What Can We Do?

Ascend can help you in setting up Variable Capital Company (VCC), maintaining accounts and tax and GST.