SINGAPORE Law and Practice Contributed by: Woon Hum Tan, Shook Lin & Bok LLP
be acquired at a consideration of not less than SGD200,000 for each transaction. To invoke this exemption, a notification must be lodged with the MAS before the fund can be offered pursuant to Section 305 of the SFA. For an exempt offering of alternative funds to non- retail investors, the following would generally apply: • the offer must be accompanied by a PPM; • the PPM must state the statutory exemption that is invoked for the exempt offer; • there must be no advertising or promotion of the funds; and • there must not be a prospectus registered with the MAS. 4.7 Compensation and Placement Agents See 4.4 Rules Concerning Marketing of Alternative Funds and 4.6 Private Placements . Licensed FMs can market the alternative funds that they manage. They can also appoint placement agents and brokers to distribute the fund and raise capital for the fund. Placement agents may be used to widen the capital pool or help raise capital more success - fully or efficiently. Typically, a placement agreement or distribution agreement would be signed to govern the placement and distribution, respectively. The Licensed FM’s personnel can be compensated for their capital raising effort for the fund that the Licensed FM and the personnel are managing. It is more common for their financial rewards to be in the form of performance bonuses correlated to the suc - cessful capital raising. 4.8 Tax Regime for Investors Singapore adopts a semi-territorial system of taxation. Singapore income tax is imposed on income of any person that is accruing in or derived from Singapore and on foreign-sourced income received or deemed to be received in Singapore, unless an exemption under the ITA is applicable. The current Singapore corporate income tax rate is 17%.
Singapore tax is only imposed on income. Currently, any gain which is capital in nature is not subject to tax. The IRAS can challenge and has challenged that gains derived from alternative funds are income in nature. In such instance, the alternative funds will be subject to the prevailing corporate tax rate of 17%. Where the alternative fund is regarded as tax resident in Singapore, any dividends distributed by the alterna - tive fund should constitute one-tier tax-exempt divi - dends. Any gains made by an investor of the alterna - tive fund from the disposal or redemption of their units or shares in that fund will depend upon the particular circumstances and profile of the investor. Gains made by the investor may be subject to Singapore tax to the extent that such gains are regarded as sourced in Singapore and revenue in nature, in the absence of any tax exemption or incentive schemes. Stamp duty is a tax on executed documents (whether in physical or electronic form) for the sale or transfer of interest in any immovable property in Singapore, and in any stock or shares in a company. This may be applicable to units or shares in an alternative fund. The current applicable stamp duty rate is 0.2% for executed documents relating to stocks or shares, except stocks or shares of certain companies which directly or indirectly hold certain categories of immov - able properties. This chargeable rate is 0.2% of the transfer consideration or the value of the shares being transferred, whichever is higher. Where there is no open market value of shares available, the Comptrol - ler of Stamp Duties is willing to accept the net asset value as the value of such shares. There is no differentiation for alternative funds nor for investors in alternative funds. There are tax incentives applicable to alternative funds. See 2.4 Tax Regime for Funds . 4.9 Double Tax Treaties Singapore has entered into more than 90 double tax agreements. Alternative funds that are structured as a company or a VCC established under Singapore law can utilise the relevant double tax agreements and enjoy treaty benefits provided the conditions of the relevant treaties are fulfilled.
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