From a tax perspective, any investment fund structure should meet two key

criteria:
1st, it should be tax neutral, i.e. as an investment fund essentially operates as a
pooling vehicle it should not expose investors to more burdensome taxation than
if they were to invest directly; and
2nd, it should provide certainty of taxation, i.e. it should be possible to determine
the tax consequences at every level, from income from investments to the
distributions to investors.
Generally, tax neutrality of a fund structure means the following:
1. no taxation at the level of the fund itself; and
2. no taxes on distributions from the fund to its investors in the location of
the fund.
A Singapore fund set up as a company and approved under one of the existing
tax exemption schemes, i.e.:
1. the Singapore Resident Fund Tax Exemption Scheme; and
2. the Enhanced-Tier Fund Tax Exemption Scheme, generally meets the
above criteria.
The Singapore Resident Fund Scheme was introduced to encourage fund
managers to base their fund vehicles in Singapore, by giving Singapore based
funds the same tax exemptions given under the offshore fund regime (e.g. to a
Cayman Islands fund). The main advantage of using a Singapore fund over a tax
haven based fund is the access to Singapores large tax treaty network, which
now stretches to over 70 countries.
An additional advantage of the Singapore Resident Fund Scheme is that the
potential double charge that may arise under the Offshore Fund regime (i.e.
where both a financial penalty and tax may be paid) should not occur for a
Singapore resident fund. This is because dividend payments from a Singapore
fund are exempt from Singapore tax. Specific approval must be sought from the
Monetary Authority of Singapore (MAS) to access the tax exemption under the
Singapore Resident Fund Scheme and conditions are imposed. In particular, the
fund vehicle must be a company and have its administration performed in
Singapore.
Structure Aspects
Private equity funds do not offer redemption rights. Instead, they exist for terms
of yearsusually around five to ten yearsafter which they wind up by
distributing their assets or by selling their assets and distributing the proceeds.