SINGAPORE Law and Practice Contributed by: Woon Hum Tan, Shook Lin & Bok LLP
• for Section 13O, the fund must be a Singapore company or VCC – the fund must have at the time of application and at the end of every financial year minimum assets under management (AUM) of SGD5 million; • for Section 13U, the fund must have at the end of every financial year minimum AUM of SGD50 mil - lion; • the Licensed FM must have at least two (for Sec - tion 13O) or three (for Section 13U) full-time invest - ment professionals with minimum salary qualifica - tions; • the fund must be administered in Singapore; • the fund must have a minimum annual local expenditure that corresponds to its AUM (SGD200,000 for AUM less than SGD250 mil - lion, SGD300,000 for AUM equal to or more than SGD250 million but less than SGD2 billion, and SGD500,000 for AUM equal to or more than SGD2 billion); • the fund must not alter its investment strategy or objective after the tax incentives are approved unless it obtains the prior approval of the MAS; and • there are other specific requirements and restric - tions for Section 13O. There are also specific requirements and restrictions regarding the investment assets and investment income of the fund. Where the fund is managed by a single-family office (SFO) that is exempt from a CMS licence for fund management under the SFA, additional requirements are applicable for the purposes of the Section 13O and 13U tax incentives with effect from 5 July 2023. The key changes in conditions from the previous con - ditions issued by the MAS on 18 April 2022 are that: • there is no longer a grace period for applicants to meet the minimum conditions of the Section 13O and 13U tax incentive schemes, which must now be met at the point of application and maintained through the incentive period (including minimum assets under management, minimum number of investment professionals, and minimum number of investment professionals who are not family mem - bers of the beneficial owners);
• the fund must have a minimum annual local expenditure of SGD200,000, subject to the tiered spending requirement framework; • eligible donations to Singapore charities as well as grants to qualifying blended finance structures may now be recognised under the minimum business spending requirement, provided the minimum local expenditure requirement has been met; • more categories of eligible investments have been added under the capital deployment requirement (CDR); and • the amount invested in certain eligible investment categories will be scaled by a multiplier of 1.5 (or 2 for CDR computation). Philanthropy Tax Incentive Scheme for SFOs (PTIS) A qualifying donor approved under the PTIS scheme will be able to claim a 100% tax deduction for their overseas donations made through qualifying local intermediaries for a period of five years starting from an approved incentive commencement of 1 Janu - ary 2024. The tax deduction is capped at 40% of the approved qualifying donor’s statutory income. The unutilised deductions cannot be carried forward to be offset against income from any subsequent year of assessment. The deduction also cannot be trans - ferred to another company of the same group under group relief arrangements. To qualify, donors must have an incentivised fund under the Section 13O or 13U schemes and meet the eligibility conditions. 2.5 Loan Origination Alternative funds can originate loans (ie, extend loans to a borrower). There are no limitations nor special rules applicable to alternative funds that originate loans, provided such alternative funds operate within a statutory exemption under the Moneylenders Act 2008 (MLA). The exemption from having to hold a moneylender’s licence pursuant to the MLA applies to any person who lends money solely to (i) an accred - ited investor or (ii) corporations, limited liability part - nerships, trustees or trustee-managers (as the case may be) of business trusts for the purposes of the business trusts, or trustees of real estate investment trusts (REITs) for the purposes of the REITs.
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