Is Singapore gaining or losing interest as a fund domicile?
Singapore is not a particularly mainstream fund domicile, but it does have its uses for Singapore-based managers and global firms who have a presence in Singapore. The government is promoting a new vehicle called the variable capital company, which serves as an alternative to other types of Singapore vehicles, and is intended to increase the popularity of Singapore as a fund domicile. We do see increasing interest in the market about the VCC and more Singapore fund managers considering the use of Singapore vehicles in lieu of offshore vehicles.
What is the attraction compared with other domiciles?
Singapore is considered by many to be a reputable jurisdiction with robust rules and regulations that are compliant with international standards governing taxation and anti-money laundering.
What is the fund structure of choice?
To date, fund managers that use a Singapore fund vehicle have typically used a Singapore limited partnership in cases where the pooling vehicle actually domiciled in Singapore or a Singapore company if the vehicle is being used as a “master” fund as part of a master/feeder structure.
Which investors does it appeal to?
Singapore structures generally appeal to investors who are interested in funds that invest into countries that have a double tax treaty with Singapore. In our experience, certain investors are less willing to invest in or through a country listed as a “low-tax” jurisdiction and would prefer Singapore to traditional offshore tax centres.
What is its weakness/downside compared with other domiciles?
The biggest downside is probably a lack of familiarity with international investors (although this is increasingly changing). Practically speaking, the benefits from using a Singapore structure would usually require a Singapore-based manager due to the tax considerations described.