By Vlad Cuc, specialist in company formation matters
The special purpose vehicle or entity (SPV/SPE) is mainly used in the investment funds industry and is the correspondent of subsidiaries of foreign companies in Singapore. The SPE or SPV is usually set up in order to ensure the business in Singapore will continue even if anything goes wrong with the parent company. Protection against bankruptcy is the main advantage a special purpose vehicle offers in Singapore. The SPV is usually preferred to other types of investment vehicles because of the enhanced protection from an accounting point of view.
The special purpose vehicle or entity is usually created for specific purposes or for a limited period of time.
Our company registration agents in Singapore can offer more information on the investment funds industry in the city-state. We can also help investors with the company registration procedure of a special purpose entity in Singapore.
Meanwhile, we invite you to watch our concise video about the SPV company:
Banks or insurance companies in Singapore are most prone to set up SPVs or SPEs in the city-state. This usually happens because these types of Singapore companies can offer new investment possibilities which cannot be offered by usual funds, such as hedge funds. The SPV is suitable for investment banks because they offer protection related to loans and other monetary tools. The SPV is also used to secure certain assets in Singapore or even to fund new ventures. The Singapore SPV can offer an investor the possibility to allocate money for a specific project alone. Another reason to use a SPV is to raise capital, as this type of entity can borrow money with lower interest.
However, those considering to open a company in Singapore under the form of a SPE or SPV should take into consideration that there are certain risks related to employing them. Our local company formation agents can offer details related to these risks.
Even if special purpose entities are commonly used in the investment funds industry, in the last few years, these types of structures have also become popular among those interested in setting up startup companies in Singapore. This is possible because of startups need funding which can be obtained easier and more securely through a SPV.
Among the benefits of using a Singapore SPV when creating a startup are:
If you want to open a company in Singapore under the form of a startup and need more information on how the SPE can be used for such a purpose, you can ask for guidance from our local advisors.
When opening a SPV in Singapore, the following laws and regulations must be respected:
Our Singapore company formation specialists can offer more information on the laws applying to special purpose vehicles.
The limited liability company is the most employed type of structure when setting up a SPV in Singapore. The company must be registered with the Trade Register as any other type of entity.
One should also know that a Singapore SPV or SPE is subject to different accounting requirements than companies incorporated for commercial purposes.
The other form which can be used for creating a SPV in Singapore is the limited liability partnership which can also be used for investment purposes. Trusts and joint ventures can also be employed as legal entities for the creation of SPEs in Singapore. Those who want to register a SPV, no matter the legal entity chosen, only need to stipulate in the incorporation documents the main object of activity of the company which must comply to those suitable for such an entity.
Opening a SPV/SPE in Singapore comes with several advantages, among which:
Our Singapore company formation consultants can offer more information on the advantages of special purpose vehicles.
From a taxation point of view, the SPV will be imposed the corporate tax in Singapore, however, from an accounting point of view, the company will be required to file consolidated financial statements.
Among the specific tax regulations applicable to Singapore special purpose vehicles are those related to the Goods and Services Tax – SPVs are exempt or subject to a 0% GST rate depending on the types of assets received.
The SPV is required to pay the stamp duty in relation to the execution of various documents related to properties and shares. Also, Singapore SPVs are subject to withholding taxes on interests and royalties when paid by a Singapore payer to a non-resident.
If you want to set up a SPV in Singapore and need assistance, do not hesitate to contact us. Our Singapore company formation consultants can also offer information on the accounting requirements for SPVs and SPEs.
If you want to open a company in Singapore and need accounting services, our specialists can offer tailored services, including related to the taxation and accounting requirements imposed on SPVs.