Can a fund acquire investments prior to making a section 13O incentive application?
A fund that acquires an investment before the commencement date of the section 13O incentive award will result in a breach of the condition “the fund is not a person that was previously carrying on a business in Singapore, where that business in Singapore generated income that would not have been tax-exempted”, as stated in para 4.2 of the MAS circular FDD Cir 09/2019. This is regardless of whether the fund derives any income from the investment. The rationale for this condition is that from a developmental perspective, the grant of the incentive is predicated on new incremental investments after the commencement of the award.
Upfront exceptions are granted for warehousing of investments, setting up bank accounts in anticipation of commencing operations and placement of monies in deposits / money market instruments on a temporary basis, as stated in para 4.2 of the MAS circular FDD Cir 09/2019.
Source: MAS FDD Cir 05/2022