Venture Capital Fund and Fund Management Incentive

Governments across the globe are dedicated to cultivating environments conducive to investment and economic prosperity. In line with this goal, the Singaporean government has implemented the Venture Capital Fund and Fund Management Incentive program (VCF/FMI), aimed at propelling innovation, enticing investments, and facilitating the growth of Singapore companies. By prioritizing the development of a thriving investment ecosystem, this initiative presents alluring advantages for both eligible funds and fund management companies. This article endeavors to offer a comprehensive understanding of this incentive, emphasizing its pivotal benefits, delineating the qualifying criteria, and elucidating the procedural aspects of the application process.

Topics To Be Discussed

Key Facts about the VCF/FMI Incentive

Benefits of the VCF/FMI Incentive

Eligibility Criteria for the VCF/FMI

How to Apply for the VCF/FMI

Key Facts about the Venture Capital Fund and Fund Management Incentive

The VCF/FMI Incentive is composed of two distinct elements, namely the Venture Capital Fund Incentive (VCFI) and the Fund Management Incentive (FMI). The VCFI component extends a tax exemption to qualifying funds, provided they meet the specified scheme criteria. Simultaneously, the FMI component entitles fund management companies to a concessionary tax rate on income generated from the management of VCFI approved funds, thereby fostering the expansion of fund management activities within the nation. The scheme is administered by the Enterprise Singapore (ESG), an agency playing a crucial role in driving Singapore's economic development by attracting foreign investments, promoting local businesses, and supporting the growth of key industries.

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Tax credit Amount

Tax exemption or a concessionary tax rate of 5%.

Timeline

The evaluation period can vary but typically takes several weeks to a few months.

Key Requirements

1. Company registered in Singapore;

2. Minimum fund size of S$10 million for VCFI; OR

3. Minimum Assets under Management of S$40 million for FMI.

Benefits of Singapore Venture Capital Fund and Fund Management Incentive

The VCFI component furnishes a notable benefit in the form of a tax exemption on qualifying income streams throughout the entire lifespan of the fund, with a maximum exemption period of 15 years.
On the other hand, the FMI component offers a significant advantage by providing a 5% concessionary tax rate on both management fees and performance bonuses earned from the management of VC funds approved under the VCFI scheme. The FMI is granted to eligible fund managers for a duration of up to five years, with the possibility of renewal in tranches of up to five years, contingent upon meeting the stipulated qualifying conditions.

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Eligibility Criteria for the VCF/FMI Incentive Singapore

To qualify for the VCF/FMI incentive, applicants must meet the following criteria:

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VCFI Component Requirements:

A fund must have a minimum fund size of S$10 million.

It should accumulate cumulative Local Business Spending (LBS) of at least S$100,000 multiplied by the incentive tenure, to be fulfilled by the end of the incentive tenure.

It must invest a certain percentage into unlisted Singapore based companies by year five of the incentive or by the end of the incentive, whichever comes earlier.

Note that investments into unlisted Singapore-based companies made before being granted the Venture Capital Fund Incentive award would not be counted towards meeting the investment criteria.

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How to Apply for the VCF/FMI

Typically, the application process for the VCF/FMI involves several stages, and the time taken to complete each stage may differ based on the complexity of the application and the responsiveness of the company. On average, the entire process may take several months to complete. Here's a general overview of the stages involved in the application process:

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This series of articles regarding Singapore government incentives was prepared by CorporateServices.com, a leading Singapore-based corporate service provider. We offer a range of services for private limited companies in Singapore. Our team of experienced experts provides Singapore company registration and other incorporation-related services through our cutting-edge online platform.

Contact us if you need assistance with setting up a new Singapore company or would like to transfer the administration of your existing company to us.