1. The Ministry of Finance is inviting interested parties to provide feedback on the proposed changes to the Goods and Services Tax Act and Stamp Duties Act, which will be incorporated into a Variable Capital Companies (Miscellaneous Amendments) Bill 2019. The consultation period is from 14 February to 1 March 2019.
2. The Variable Capital Companies Act 2018 (VCC Act) was passed by Parliament on 1 October 2018. The VCC Act provides for the incorporation and operation of a new corporate structure for investment funds, and is expected to come into operation in the second half of 2019. The VCC structure will complement and expand the existing suite of fund structures in Singapore. The introduction of VCCs strengthens Singapore’s position as a full-service international fund management centre, and provides opportunities to fund managers and fund servicing professionals such as fund administrators, lawyers, and accountants.
3. As conveyed during the second reading of the Variable Capital Companies Bill in Parliament on 1 October 2018, the tax framework for VCCs is to be separately set out via legislative amendments to the relevant tax legislation.
4. The proposed tax treatment for VCCs, which is formulated in consultation with the industry, recognises the unique characteristics of VCCs, which combine the advantage of a single legal entity at the VCC level with segregation of assets and liabilities at the sub-fund level. The legislative amendments to the relevant tax legislation are expected to come into operation in the second half of 2019. Salient aspects of the proposed legislative amendments for consultation are as follows:
Goods and Services Tax (GST)
a) GST will be applied at the sub-fund level (i.e. if liable, each sub-fund is required to separately register, charge, account for and file GST returns). This is because each sub-fund makes independent sale and purchase decisions based on its respective investment mandate.
Stamp Duty (SD)
b) SD treatment will be applied at the sub-fund level in view of the segregation of assets and liabilities of sub-funds within an umbrella VCC.
The public consultation on the proposed amendments to the Income Tax Act (ITA) will be separately conducted in due course.
5. The public can access the detailed consultation documents for the proposed changes to the GSTA and SDA, which will be incorporated into the Variable Capital Companies (Miscellaneous Amendments) Bill 2019, on the Ministry of Finance's website (www.mof.gov.sg) and the REACH consultation portal (www.reach.gov.sg).
6. We encourage all interested parties to submit comments using the prescribed template, through:
a) [preferred mode] email to firstname.lastname@example.org for GST related feedback and email@example.com for SD related feedback; or
b) fax to 6337 4134; or
c) post to: Ministry of Finance
100 High Street, #10-01
Attention: Tax Policy Directorate