Tax for VCCs

The chargeable income or exempt income of an umbrella VCC is the sum of the chargeable income or exempt income of its sub-funds. The income of a sub-fund is determined as if it were a VCC.

In line with the requirement under the VCC Act for the segregation of assets and liabilities of sub-funds, any expense, capital expenditure, loss or donation of a sub-fund will not be available for deduction against the income of another sub-fund or any other income of the umbrella VCC. This effectively quarantines any such amount and prevents such amounts from being utilised against the income of another sub-fund or the umbrella VCC. The availability of such amounts for offset against future income is subject to a shareholding test.

There is no group relief system for umbrella VCCs.

Certain common tax rules are applied separately at the umbrella and sub-fund levels:

• Unabsorbed capital allowances, losses and donations — sub-fund level
• Shareholding test — sub-fund level
• Partial tax exemption, start-up tax exemption and corporate tax rebate — VCC level
• Exemption of gains or profits from disposal of ordinary shares — sub-fund level
• Modification of provisions for VCCs redomiciled in Singapore — sub-fund level
• Tax credits — sub-fund level