Published on: Jan 3, 2020
A Family Office is one of the best vehicles for HNW families to ensure the day-to-day administration and management of their assets.
A well-run family office will go beyond this and not only preserve the family’s wealth, but help to protect, transfer and grow it. For many wealthy families around the world, the location of their family office matters for many reasons including quality of expertise, tax and financial incentives and others.
Singapore has emerged as a regional – and global – leader for Family Offices. Here are three reasons why:
Tax schemes and incentives
Singapore has several tax incentives that are available for funds managed by a family office. These schemes (under Sections 13CA, 13R and 13X of Singapore’s Income Tax Act) allow for onshore and offshore family investment vehicles to be exempted from Singapore income tax on certain investments (assuming certain criteria are met). The tax incentives also provide GST remission for qualifying tax-exempt vehicles to recover GST incurred on expenses for the purpose of investment activities, and a withholding tax exemption on interest-related payments made by the qualifying tax-exempt vehicles (subject to certain conditions). Lastly, Singapore has over 100 Double Taxation Agreements (DTAs) available to family offices who may be able to reduce or not pay withholding taxes on certain types of income.
The Monetary Authority of Singapore (MAS) provides exemptions for Single Family Offices (SFOs) engaging in fund management and financial advisory activities from licensing and regulatory requirements. SFOs usually engage in a number of regulated activities such as fund management or financial advisory. Under MAS’s exemptions, an SFO that engages in regulated activities will not need to be licensed if it provides its services to a “related corporation”. MAS acknowledge that there is no “one size fits all” and for this reason is willing to consider granting exemptions on a case by case basis.
Stable business and financial hub
The World Bank rates Singapore as the second easiest place to do business and its stable government and economy have made it an attractive financial centre for the region. Wealthy investors may participate in the “Global Investor Program” (GIP), receiving Permanent Residence status in Singapore. The financial services industry is well-regulated which has spurred the creation of an ‘ecosystem’ of banks, asset managers, lawyers, fiduciary firms and other professional service providers that cater to the specific needs of family offices. The City State’s proximity to the growing ASEAN region has also helped, offering convenient access for HNWIs.
There has been a significant increase in the number of wealthy individuals looking to set-up a family office in Singapore to manage their wealth, backed up by local specialists and experts to support their activities. It is this ecosystem that has supported the quadrupling of the number or Family Offices in Singapore between 2015 and 2017 and this growth continues. While there are other jurisdictions around the world that offer Family Office services, few would be able to provide the ‘full package’ of strategic geographical location, developed infrastructure, technological advancement, political, legal and economic stability and other benefits that Singapore can bring.
For more information on how Alpadis Group can advise on setting up a Family Office in Singapore, contact us here