On or about 3 September 2019, the Variable Capital Companies (Miscellaneous Amendments) Bill was read for the second time in Parliament on 3 September 2019 by Ms Indranee Rajah, Second Minister for Finance.
The Bill comprises two broad categories of proposed amendments. The first category relates to amendments to put in place the tax treatment for variable capital companies (VCCs). The second category relates to amendments to the VCC Act which was passed by Parliament in October 2018.
The VCC is a corporate structure incorporated under the VCC Act which may only be used as an investment fund vehicle. A VCC may vary its share capital without seeking investors’ approval, and may pay dividends using profit or capital. The shareholders of a VCC are the fund investors. A VCC must be managed by a fund manager that is regulated by MAS.
The main amendments proposed are as follows:
- a variably capital company (VCC) will be treated as a company for corporate income tax purposes, as announced in the 2018 Budget
- GST will be applicable at the sub-fund level
- stamp duties are levied at the sub-fund level
- the insolvency regime for VCCs and their sub-funds will be aligned to that of other corporate structures in Singapore, ie the framework will reference the Insolvency, Restructuring and Dissolution Act rather than the Companies Act; and
- other technical amendments to clarify certain requirements.
Source: Ministry of Finance, 3 September 2019.