Updates on the GST rules for the Fund Management Industry
The MAS issued Circular FDD Cir 02/2014 ("MAS Circular 2014") on 31 March 2014 that introduced the much debated rules on the "belonging" status of an incorporated fund for the purpose of applying the GST treatment of services to the fund. To recap, the MAS Circular 2014 stipulated that an overseas fund (other than a trust fund) will be treated as having a business establishment and hence "belonging in Singapore" if the fund wholly relies on a Singapore-based fund manager ("SFM") to carry on its business. Services provided to such a fund would be subject to GST at the standard rate of 7 percent.
Following feedback from the industry and us on the need to simplify the rules and on the potential implications for the industry, the rules have been revised and covered in the IRAS’ e-tax guide "GST : Guide for the Fund Management Industry (Second Edition)” released on 18 March 2015 (“IRAS E-tax guide”) and in the MAS Circular FDD 02/2015 issued on 24 March 2015 (“MAS Circular 2015”).