Mumbai-based financial services firm ASK Group’s real estate fund has registered its maiden realty fund in Singapore to sidestep the implications of the recently introduced general anti-avoidance rules (GAAR) in the Finance Bill, which seeks to plug tax avoidance practices. plans to raise $250-300 million in its first offshore fund.
Sunil Rohokale, CEO and managing director of ASK Property Investment Advisors told VCCircle, “We have registered our first offshore fund in Singapore and have received clearance and approval as exemption fund from the authorities in Singapore. We are setting up our office in Singapore for the same. We are the first real estate fund from the country to be registered in Singapore.”
Most of the India-focused real estate investment firms which have raised offshore funds are either based in Mauritus, Cyprus or Cayman Islands. Last year, construction major Shapoorji Pallonji had launched its first real estate fund and it was registered in Mauritius.
The Finance Minister dropped a bombshell for offshore investment vehicles by introducing GAAR with the intention to counter aggressive tax-avoiding schemes by global investors. As part of the Finance Bill, GAAR overrides all tax treaty agreements. Also, GAAR empowers tax authorities to take calls on denying tax benefits but the implementation guideline has not been specified.
Till now Mauritius has been the most favoured route for fund managers for registering their funds to save taxes on returns from Indian investments. Although the GAAR clamp is supposed to affect all tax havens, experts say it is not clear on whether it will spare Singapore. International brokerage Nomura in its notes to clients on March 26, had recommended their clients to look at Singapore as the next destination.
Rohokale of ASK Property Investment Advisors added, “Fund raising in any market is challenging and we have also heard that post budget some foreign investors are apprehensive about India. The macro economic situation is little tough and though the journey will be difficult we do not think it will be difficult to raise money for our fund.”
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