With Singapore’s stable political environment, excellent infrastructure, and strategic location, it has become a popular destination for global investors. ICA or Investment Company Act structure has emerged as a popular investment vehicle in Singapore. This article will provide an overview of investing in ICA in Singapore, looking at what ICA is, its benefits, application process, and suitability for different investor profiles.
What is an ICA investment structure in Singapore?
ICA stands for Investment Company Act and refers to a private investment fund structure governed under the Singapore Investment Company Act. It allows investors to set up a close-ended fund structure to invest into a diversified portfolio of assets globally. ICA provides flexibility to tailor the investment strategy based on investor needs. It can invest in a range of assets like private equity, real estate, hedge funds, bonds etc. Key benefits are tax exemptions on specified income, no capital gains tax, ease of fund administration and ability to accept foreign capital.
Benefits of ICA investment structure
Some key benefits of ICA investment structure are: 1) Tax exemptions on specified income like dividends, interest and gains from sale of investments. This results in lower effective tax rates. 2) No capital gains tax imposed on assets sale, providing significant advantage over holding assets directly. 3) Flexible structure allows investments in wide range of asset classes like PE, RE, hedge funds etc. 4) Can be customized for specific investor needs in terms of investment scope, size, strategy etc. 5) Relatively easier setup and lower compliance requirements compared to traditional fund structures. 6) Accepts foreign capital and tax neutral for non-Singapore tax residents.
ICA application and requirements in Singapore
The application for ICA incorporation is submitted to Singapore’s ACRA. The key requirements are: 1) Company must be close-ended for minimum 5 years. 2) Maximum 50 investors allowed. 3) Company & fund manager must be based in Singapore. 4) Company must have minimum paid-up capital of S$1 Million. 5) Company’s sole business should be investment holding. 6) Must appoint Singapore-based investment fund manager. 7) Company & fund manager must meet licensing and regulatory requirements.
Is ICA investment suitable for you?
ICA structure is suitable for investors with: 1) Investment size > S$2 Million for better cost efficiency.2) Seeking diversified exposure across asset classes. 3) Intend to reside in Singapore through investment schemes. 4) Looking for tax optimization and long term capital growth. However, ICA requires locking up capital for 5+ years, so may not be ideal for investors wanting short term liquidity.
To summarize, ICA provides an attractive investment structure in Singapore for global investors seeking tax optimized long term capital growth and diversified exposure. With experienced advisory, ICA can be customized to suit investment preferences across asset classes. However, factors like investment size, return objectives and liquidity needs should be evaluated before opting for ICA.