Stamp Duty for Variable Capital Companies

Variable Capital Company or VCC is a new corporate structure which may be set up as a single fund structure (“non-umbrella VCC”) or an umbrella fund (“umbrella VCC”) that consists of, or is to consist of, two or more sub-funds.

A VCC is treated as a company for tax purposes. For an umbrella VCC, the sub-funds are treated as separate persons for stamp duty purposes such that stamp duty is levied at the sub-fund level. This is in line with the principle that sub-funds have segregated assets and liabilities.

When dutiable instruments are executed by any person including a VCC, stamp duties are payable within 14 days after the date of execution in Singapore or, if the instrument is executed overseas, within 30 days after the date of receipt of the instrument in Singapore.

Stamp Duty on Instruments Executed

When an instrument is executed by a non-umbrella VCC or by an umbrella VCC for its sub-fund, the instrument will attract the same duties as an instrument executed by a company. For example,

Instrument relating toStamp duty liability 
Acquisition or disposal of immovable properties by a non-umbrella VCC or by an umbrella VCC for its sub-fund 

For acquisition:

  • BSD; and
  • ABSD based on entity profile, if property acquired is a residential property 

For disposal:

  • SSD, if property disposed of is a residential or industrial property
Acquisition of stock or shares by a non-umbrella VCC or by an umbrella VCC for its sub-fund
  • Share duty
Acquisition or disposal of equity interests in property-holding entities by a non-umbrella VCC or by an umbrella VCC for its sub-fund

For acquisition:

  • ACD for buyers; and
  • Share duty, if the equity interests are shares

For disposal:

  • ACD for sellers
Lease of immovable properties by a non-umbrella VCC or by an umbrella VCC for its sub-fund
  • Lease duty
Mortgage of immovable properties or stock or shares by a non-umbrella VCC or by an umbrella VCC for its sub-fund
  • Mortgage duty

The above table provides a summary of the stamp duties payable on some common instruments. There is no difference in the stamp duty rates applicable to a non-umbrella VCC or an umbrella VCC vis-à-vis other entities. Please refer to the above links for the relevant stamp duty rates and definitions.

Stamp Duty on Instruments Between (i) an Umbrella VCC and its Sub-funds, or (ii) Sub-funds of the Same Umbrella VCC

Similarly, when an instrument is executed between (i) an umbrella VCC and its sub-funds, or (ii) sub-funds of the same umbrella VCC, the instrument will attract the same duties as an instrument executed between companies. 

Specifically, section 30 of the VCC Act provides that an umbrella VCC acting for its sub-fund is required to state the relevant details of the sub-fund in the instrument. It follows that, using the acquisition/ disposal of chargeable assets as an example:

  1. Where an umbrella VCC does not provide its sub-fund’s details in the instrument for the acquisition of chargeable assets, the acquisition will be taken to be made by the umbrella VCC for its own purpose. Consequently, any subsequent instrument (e.g. contracts for the sale and purchase of the property, conveyance direction) executed to pass the interests in the chargeable assets from the umbrella VCC to its sub-fund will attract another set of duties.
  2. Where the sub-fund details are stated in the acquisition instrument, the acquisition of chargeable assets will be taken to be made by the umbrella VCC for the purpose of that sub-fund. Consequently, any subsequent instrument executed to pass the interests in the chargeable assets from the sub-fund to the umbrella VCC or to another sub-fund of the same umbrella VCC will be subject to stamp duties.

In the event that:

  1. an umbrella VCC effects an acquisition or a disposal, with or between its sub-funds in a manner that is not evidenced or signified by an instrument; and
  2. had that acquisition or disposal been effected, evidenced or signified by an instrument, the instrument would have been chargeable with duty,
the umbrella VCC must give a notice to the Commissioner of Stamp Duties within 14 days of the transaction with its sub-fund or between its sub-funds, and that notice shall be chargeable with stamp duties accordingly. If the umbrella VCC fails to provide a notice within the stipulated timeframe, the umbrella VCC is guilty of an offence, and a fine of up to 4 times the amount of duty is payable on conviction.

Stamp Duty on Instruments Involving Shares in a Non-Umbrella VCC or an Umbrella VCC

An instrument for the acquisition of shares in a VCC (“VCC shares”) or shares attributable to a specific sub-fund of an umbrella VCC (“sub-fund shares”) is subject to share duty. As per the acquisition of shares in any other company, the share duty that is payable on the acquisition of VCC shares or sub-fund shares is calculated based on the higher of the consideration or the value (e.g. net asset value) of the shares acquired.

If the non-umbrella VCC or the sub-fund is a property-holding entity and there is a qualifying acquisition or disposal, ACD is applicable in addition to the share duty.

    Where ACD is payable, please submit a copy of the instrument which effects the qualifying acquisition or disposal and all other required information to the Commissioner of Stamp Duties within 14 days after the date of execution of the instrument (if executed in Singapore) or 30 days after the date of receipt of the instrument in Singapore (if executed overseas). The ACD payable is calculated based on the market value of the VCC’s or sub-fund’s underlying residential properties at the time of the qualifying acquisition/disposal.

    Stamp Duty on Cancellation and Issuance of Shares in a Non-Umbrella VCC or an Umbrella VCC

    Share duty is not chargeable on general cancellation and issuance of shares by a non-umbrella VCC or an umbrella VCC, unless it is to effect a disposal of the shares by a transferor to a transferee. In the latter case, the cancellation of shares held by the transferor and the issuance of new shares in the non-umbrella VCC or umbrella VCC to the transferee will be treated as a transfer of shares under section 33 of the Stamp Duties Act (Cap. 312) and share duty will be charged accordingly.

    If there is a disposal of shares effected in such manner, please submit the relevant documentation on the cancellation and issuance to the Commissioner of Stamp Duties within 14 days after the date of issuance of the shares.

    In the event that the non-umbrella VCC or umbrella VCC is a property-holding entity, the cancellation or issuance of shares of the non-umbrella VCC or umbrella VCC may also attract ACD if the transferor or transferee (as the case may be) is or becomes a significant owner (after taking into account the interests which their associates may own). However, if the Commissioner of Stamp Duties is of the opinion that the variation of capital results in changes in the holding of the equity interests which could not reasonably be prevented, ACD would not be charged on the cancellation or issuance of the shares. Such cases will be considered on a case-by-case basis.