Quick Recap

Monetary Authority of Singapore (MAS) and Inland Revenue Authority of Singapore (IRAS) announced the refined rules regarding how one assesses the "belonging status of a fund" on 31 March 2014 and 1 April 2014 respectively.

Singapore fund managers (SFM) need to consider the factors below to ascertain whether fund management services provided to a fund (especially those incorporated overseas) would attract 7% GST:

Updates

Following industry feedback on the practicality of the refined rules, as well as to remove disincentives for a fund (especially those incorporated overseas) to engage a SFM1, MAS and IRAS announced the following updates in late March 2015:

• Their calibrated views, as well as provided clarity on points (a) to (c) mentioned above
• Granted zero-rating concession (i.e. 0% GST applies) prior to 1 April 2015 for fund management services provided to a fund or an overseas-based fund manager (OFM)1 that is incorporated or registered overseas and belongs in Singapore
• Granted remission (i.e. 0% GST applies) effective 1 April 2015 for fund management services provided to a qualifying fund3 or OFM1

Key updates relating to points (a) to (c) as well as clarifications sought from IRAS are summarised below:

• An office with employees of its own that oversee or carry out activities such as the fund's day-to-day operation would imply that the fund has an administration office in Singapore
• When a fund or OFM wholly relies on the SFM to carry on the performance of its day-to-day operations and core business functions, it is considered as belonging in Singapore
• Meetings held through conference call or video conference will not be considered as having board meetings in Singapore unless a minimum of two directors are physically present at the meeting
• Regular board meetings mean at least four times within a 12-month period

Taking the Next Step

The update is a welcomed move that helps Singapore to maintain its attractiveness as a hub for fund management activities. SFMs should review their existing fund management services to determine if they fall within the zero-rating concession and remission shared.

We specialise in advising fund managers on their business arrangements and establishing the appropriate GST treatment of the services provided to funds. Additionally, we help to determine if they are liable for GST registration.

Contact our team of GST professionals:

¹ Refers to prescribed fund manager in Singapore that holds a capital markets services licence under the Securities and Futures Act (Cap. 289) or one that is exempted under the Act from holding such licence.

² Refers to one that is incorporated or registered overseas.

³ Refers to one that satisfies conditions of the income tax concession under Section 13CA or 13X of the Income Tax Act as at the last day of its preceding financial year.