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The Government has been actively
promoting the venture capital industry since the
mid-1980s. Venture capital funds managed in Singapore
have reached $7.7 billion as at end of last year.
Currently, venture capital funds enjoy tax exemption
on the gains from disposal of investments, and
on certain investment incomes for a maximum of
10 years. At the same time, fund management companies
which manage venture capital funds are awarded
pioneer status for managing these funds.
The current 10-year limit may
be too restrictive for some investments which
have maturity periods which are longer than 10
years. I have therefore decided to extend the
tax incentive enjoyed by venture capital funds,
on a case-by-case basis, by up to a further 5
years beyond the current maximum of 10 years.
This will encourage venture capital funds to take
a longer term perspective of their investments
and to minimise premature divestment. The extension
will take the form of a concessionary tax rate
of not more than 10 per cent. The fund management
companies which manage these venture capital funds
will also in tandem enjoy concessionary tax rate
under the Development and Expansion Incentive
beyond the tenth year. The changes will take immediate
effect. |
