Singapore has taken a number of steps to compete more as a centre for family offices against rival hubs such as Hong Kong.
Singapore’s government has reiterated how rules introduced last year are designed to create certainty for family offices and encourage these entities to set up in the Asian city-state. Singapore is competing against rival hubs such as Hong Kong in this space.
In a published response to a parliamentary question, Tharman Shanmugaratnam, Senior Minister and Minister in charge of the Monetary Authority of Singapore, said tax incentives for single-family offices are designed to “provide them [with] certainty that the funds they set up will not be taxed on income derived from investments managed in Singapore.”
“Without such certainty, funds of a single family office may be taxed in Singapore in addition to the tax that the family (as an investor) may be subject to. This would make it unattractive for single family offices to set up and invest in funds in Singapore,” Shanmugaratnam said.
Last April, MAS raised the minimum criteria for single-family offices by increasing hiring requirements and introducing a new requirement for family offices to invest at least 10 per cent or S$10 million ($7.5 million) of their assets (whichever is lower) in local investments.
“Single family offices often start with small teams of investment professionals. Hence the more meaningful way to create local jobs is through their positive spillover effects in creating demand for anciliary services like legal, custody and tax services, and fund administration,” the minister continued. “Government agencies are developing initiatives to tap the growing interest from family offices to provide capital to support enterprise financing, ESG investments, and philanthropic activities.”
As previously reported, depending on size, family offices must spend S$500,000 to S$1 million in the domestic economy each year, rising from S$200,000. Additionally, of the three investment figures which they are required to hire, at least one must be a non-family member.
Around the world, regulators are increasingly wrestling with how to treat single family offices, which collectively oversee trillions of dollars of assets. In the US, SFOs are exempt from direct regulatory oversight – prompting anger from some lawmakers.
The city-state has taken steps to compete in these areas more effectively. Since 2020, it has had a variable capital company (VCC) regime which has been in place since 2020. VCCs enable branches of a family with different goals to run separate sub-funds but pool their costs. To some extent the development mirrors the structure innovations that have taken place in Jersey, Guernsey, the Cayman Islands and other offshore centres.
See here for another story about Singapore's rules and family offices.