Variable Capital Companies

What is it?

VCC is a new legal entity form / structure for all types of investment funds in Singapore. It can be formed as a single standalone fund, or as an umbrella fund with two or more sub-funds, each holding different assets.

Advantages

1. Reduced Tax Compliance Burden

An umbrella VCC will only need to file a single corporate income tax return regardless of the number of sub funds the umbrella VCC has.

2. Confidentiality

Subject to adhering to certain regulatory requirements, the register of members of a VCC is not required to be open for inspection by the public. Financial statements are also not publicly available.

3. Flexibility

A VCC may freely redeem its shares (without the requirement for solvency tests and corporate resolutions) and pay dividends using its net assets/capital, thereby providing flexibility in the distribution and return of capital.

4. Easier to Meet the Conditions for Tax Exemption under Section 13R and 13X

The tax incentive conditions and the economic commitments under both incentive schemes will be applied to the umbrella VCC rather than to the individual sub-funds.

5. Grants

The Variable Capital Companies Grant Scheme (VCCGS), launched by Monetary Authority of Singapore (MAS), is a new grant available under the Financial Sector Development Fund (FSDF) to co-fund qualifying expenses paid to Singapore-based service providers for work done in Singapore, in relation to the incorporation or registration of a VCC. The grant allows for up to 70% co-funding of qualifying expenses (such as legal services, tax services, and administration or regulatory compliance services), and is capped at S$150,000 per VCC. This scheme is valid till 15 January 2023.