SINGAPORE Trends and Developments Contributed by: Lee Woon Shiu and Catherine Cheung, DBS Private Bank
factor for UHNWIs’ decision to base their families and SFOs in Singapore. Singapore’s tax system Singapore’s corporate tax rate of 17% on chargeable income for both local and foreign companies is one of the most competitive in ASEAN. This rate can be reduced to a much lower effective tax rate through various tax exemption schemes – eg, the enhanced concessionary tax rate of 5% for newly listed fund managers in Singapore, and tax exemption on fund managers’ qualifying income arising from funds investing substantially in Singapore-listed equities. Individuals and businesses operating in Singapore can also enjoy favourable tax relief through other incentive schemes and comprehensive tax treaty networks. There is no capital gains tax in Singapore but trading gains (eg, derived from short-term profit-driven trans - actions) are taxable under a single-tier system. This means that businesses are taxed only on profits, with dividends distributed to shareholders being tax-free. Incentives to attract investments In the past few years, Singapore’s targeted tax incen - tive schemes have successfully attracted significant wealth and investments from wealthy families and These include the Enhanced-tier Fund Tax Incentive Scheme (S13U), Onshore Fund Tax Incentive Scheme (S13O) and Offshore Fund Exemption Scheme (S13D), which are known collectively as the “Schemes” and are all being extended until 2029. Singapore’s vibrant family office landscape is fuelled and supported primarily by both S13U and S13O schemes, which provide tax exemptions on specific income from designated investments. Amidst the bur - geoning number of family offices, MAS has tightened the qualifying criteria under these schemes through several amendments, to ensure Singapore attracts high-quality wealthy families. businesses in key industries. Schemes administered by MAS To qualify for either the S13U or S13O scheme, SFO- based structures must meet certain stringent eco - nomic requirements, such as:
• the need to invest in Singapore; • employing a minimum number of local investment professionals; • minimum fund size; • local spending requirements; • eligible donations to local charities; and • capital deployment requirements such as grants to blended finance structures with substantial involve - ment of financial institutions in Singapore and contributing to ESG causes. Since 1 October 2024, new applications for S13O and S13U schemes are required to include a screening report from a service provider approved by MAS. UHNWIs who may want to start small or are not ready to set up their own SFO are looking to an increas - ingly popular alternative known as multi-family offices (MFOs), which are designed to serve multiple affluent families simultaneously. A variable capital company (VCC) is a new corporate structure that was introduced in Singapore in 2020 for investment funds, and can be used as an MFO to manage assets and provide services to members of different families. An MFO VCC must be managed by a permissible fund manager and can be set up as a standalone fund or as an umbrella fund with multi- ple sub-funds, each holding a portfolio of assets and liabilities segregated from the other sub-funds belong - ing to different families. Schemes administered by the Economic Development Board (EDB) or Enterprise Singapore The EDB focuses on attracting investments and devel - oping key industries in Singapore, while Enterprise Singapore is the agency responsible for promoting Singapore’s trade and enterprise. They oversee vari - ous trade-related initiatives – eg, the GTP. Global Trader Programme (GTP) This scheme is administered by Enterprise Singapore and offers a concessionary corporate tax rate of 5% or 10% for five years on qualifying trading income, including offshore income, to international trading companies that establish substantial operations and employment in Singapore.
513 CHAMBERS.COM
Powered by FlippingBook