Cebu Micro-VCs Fly the Peso Home and Park the Fund in Singapore
Small Visayan funds pitch local founders on backing the region, but the carried-interest tax question keeps their vehicles incorporated across the strait.
A micro-VC in Cebu can now raise a peso-denominated fund, court Visayan founders at demo days, and still keep the actual fund vehicle registered as a Singapore Pte Ltd. The pitch says home. The paperwork says elsewhere.
The pull toward the CREATE framework is real. It rationalized incentives and gave managers a story about building capital that stays and recirculates in the Visayas instead of routing every founder toward a Delaware or Singapore holding structure. On paper, a local fund backing local companies is exactly the loop the Innovative Startup Act wanted to close.
The gap sits in one line item
The problem is carried interest, the share of profits a general partner takes when a fund performs. Nobody has settled how the BIR treats it: as ordinary income taxed at the top personal rate, as a capital gain, or as something a fund can structure around. Until a revenue regulation or ruling names it clearly, a GP setting up shop in Cebu is betting a chunk of future upside on an interpretation that does not yet exist.
Singapore already answered the question. Its fund-management regime gives managers a known tax outcome and a decade of case history to price against. So the vehicle goes to Singapore not because the founders are there, but because the certainty is. The limited partners writing checks want that certainty more than they want a Filipino flag on the incorporation docs.
What the founder actually signs
For a young founder in Iloilo taking a first term sheet, the fund's flag looks like a footnote next to valuation and board seats. It stops looking like a footnote when the fund's carry, its reporting, and its dispute resolution all live under Singapore law. Enforcement, wind-down, follow-on rights, and the eventual exit get argued in a jurisdiction the founder never chose and can barely afford to litigate in.
This is not a Singapore land grab. Singapore built a product and the Philippines left a blank where the tax rule should be, so capital did the obvious thing. But it does mean the money that markets itself as Visayan patient capital answers to an offshore rulebook, and the returns compound where the vehicle sits.
Who fixes the blank
The fix is unglamorous and entirely within reach. The BIR and DOF could issue a regulation defining carried-interest treatment for domestic fund managers, and the SEC could pair it with a fund-vehicle structure that LPs recognize. Vietnam and Thailand are working the same problem to keep their own managers from flipping offshore, so the window to compete is open, not permanent.
Until that line is written, the Cebu and Iloilo demo days will keep running, the local branding will keep landing, and the fund that funds the region will keep filing its returns across the strait. The founder gets the term sheet at home. The carry, the certainty, and the tax base leave with the vehicle.
