SINGAPORE Law and Practice Contributed by: Woon Hum Tan, Shook Lin & Bok LLP
requirements of authorisation for the alternative funds and registering a compliant prospectus, provided cer - tain conditions are met (see 4.6 Private Placements ). When an offer is made invoking such exemptions, there is no requirement to file the PPMs of the alter - native funds with the MAS, and thus the PPMs are not available to the public. If an offer is made invoking the exemption pursuant to Section 305 of the SFA, a copy of the PPM must be lodged with the MAS together with a prescribed notification form. Again, such PPMs In Singapore, income tax is imposed on any income that is accrued in or derived from Singapore and on any foreign-sourced income received or deemed to have been received in Singapore, unless otherwise statutorily exempted. The current corporate income tax rate is 17%. At present, the Singapore government does not impose tax on capital gains unless the investment gains of any entity are considered to be income in nature. This depends on a number of factors and is scrutinised by the Inland Revenue Authority of Singa - pore (IRAS). are not available to the public. 2.4 Tax Regime for Funds Taxes in General For the purposes of alternative funds, the investment decisions and control and management are typically delegated to the fund manager. If the fund manager is incorporated in Singapore, or has its control and man - agement in Singapore, it is highly likely that the alter - native fund will be considered to have tax residence in Singapore and be subject to Singapore income tax. Section 10L of the Income Tax Act 1947 (ITA) is deemed operative from 1 January 2024 and applies to gains from a sale or disposal of a foreign asset that occurs on/after 1 January 2024. Pursuant to Section 10L of the ITA, any gains received or deemed to have been received in Singapore by the alternative fund from the sale or disposal of any foreign investment assets (movable or immovable property situated out - side Singapore) will be treated as income chargeable to Singapore income tax, unless certain exclusions apply. One applicable exclusion is where the alterna - tive fund has sufficient economic substance in Sin -
gapore in the year in which the sale or disposal of the foreign investment asset occurs. Unit Trust The unit trust fund is not a separate legal entity. How - ever, the unit trust fund requires a trustee to hold a licence pursuant to the TCA. Such trustee must be a company incorporated under Singapore law. Thus, the unit trust fund is subject to 17% corporate income tax by virtue of the trustee being a Singapore tax resident. LP Fund The LP fund is not a separate legal entity and will not be subject to corporate income tax. Instead, the limited partners will be subject to tax on the income derived from the LP fund in accordance with their own tax incidence and liability. Company Fund The company fund is a separate legal entity and is subject to 17% corporate income tax. VCC Fund The VCC is a separate legal entity and is subject to 17% corporate income tax. Sections 13O and 13U Tax Incentives There are certain tax incentives available to alterna - tive funds and fund managers, provided certain condi - tions are fulfilled. An alternative fund managed by a Licensed FM can apply to the MAS for tax incentives pursuant to Section 13O or 13U of the ITA, allowing the fund to be taxed at a lower rate. If the relevant incentive conditions are met, the MAS will grant the incentive in writing to the alternative fund. These tax incentives (subject to renewal every five years) come under certain sections of the ITA and were extended by Parliament of Singapore on 15 October 2024 till 31 December 2029. The Section 13O and 13U tax incentive conditions have also been revised with effect from 1 January 2025, although there is a grace period extended to existing tax incentive awardees to fulfil the new conditions from the financial year ending in 2027 (year of assessment 2028). The key conditions for the incentives are as follows: • the fund must be managed by a Licensed FM;
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