Private Equity in Singapore

Updated on Monday 18th January 2016

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Private equity represents the investment capital received from individuals or corporations, which have as an intention to obtain equity ownership in various companies. The Asian market offers positive prospects for investing in private equity; if you are interested in the private equity transactions in Singapore, our team of lawyers can provide you with information on the most profitable business in this field.

Incentives for private equity in Singapore

According to the Singaporean legislation, there are no specific laws created especially for the financial development of private equity investments, but there are several taxation laws that encourage investment in this field.

The Inland Revenue Authority of Singapore has changed in March 2015 the legislation on the goods and services tax (GST), extending the applicable GST on managers in the fund management industry. There is no capital gains tax and the company is exempt from the income tax as long as the company has had 20% of the ordinary shares in target for two years before the disposal of shares.

Singaporean government has extended the Financial Sector Incentive Fund Management (FSI FM) until the end of 2018. Companies receiving the FSI FM award will receive a 10% rate deduction on the income tax; you can request a consultation on the tax system applicable to fund companies from our lawyers in Singapore.

Offshore fund in Singapore

According to the Singaporean law, an investment fund set up as an offshore fund can be exempt from the taxes on income arising from investments. In this case, the fund’s income must be produced by a Singapore fund management company with a license for capital markets services. The same exemption applies to funds not entirely owned by Singaporean citizens.

An offshore fund can be represented by an individual, a company or a trustee.

Qualifying investor in Singapore

If you are interested in the private equity business and you want to invest in a fund in Singapore, you should know that you must meet one of the following stipulations to be considered a qualifying investor:

• a non-resident citizen who does not have a permanent establishment or a business in Singapore;

• a person who can have a business in Singapore, but does not use the capital of his or her business to invest in an investment fund in Singapore;

• a person who doesn’t own more than 30% of the value of a fund.

If you need further information on the private equity investments, please contact our team of lawyers in Singapore, for legal representation or advice on this subject.

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