Why are family offices choosing to establish a presence in Singapore?

In TMF Group’s recent survey with Campden Wealth, Singapore was designated as a destination of choice for a number of family offices. Many families have established their family office in Singapore as a way to diversify from their family business, as well as being a launch pad into the Asia market.

TMF Group has had a presence in Singapore since 1999 and has recently noticed a steady increase in families and businesses choosing to expand into the country. Many of the world’s largest multinational companies have strategically placed their regional headquarters there and more and more private and public investments have been making their way to the island for the past few years, with no signs of decreasing. While the COVID-19 pandemic has obviously created complications for international business, Singapore remains a bastion of stability and has announced more than 20 special Vaccinated Travel Lanes (as of November 2021) in recognition of its importance as a central / strategic hub for the region.

The World Bank’s Doing Business 2020 report ranks Singapore second in the world for ‘Ease of doing business’, thanks to its many assets which are essential in the knowledge economy. In TMF Group’s Global Business Complexity Index 2021, Singapore is ranked as one of the least complex jurisdictions in Asia in terms of its business practices.

It has a competitive tax regime – corporate tax rate of 17%, no capital gains tax, (generally) no dividends tax and comprehensive double tax agreements, with more than 88 double [1] taxation treaties with other countries – Singapore offers various tax incentive schemes for funds, new businesses etc, and its strategic geographical location make it a preferred destination for families and businesses looking to expand in the Asia Pacific region.

Single family office
In March 2019, the Monetary Authority of Singapore (MAS) and the Singapore Economic Board (EDB) jointly established the Family Office Development Team (FODT)  to enhance Singapore’s competitiveness as a global wealth management and family office hub. The FODT seeks to enhance the operating environment for family offices; deepen capabilities of family office professionals and service providers; and build a stronger community of family offices.

Patrice Lo, Commercial Director of TMF Group’s fund business, notes that single family office (SFO) structures in Singapore benefit from exemptions from regulation under local securities law. This allows the SFO the ability to conduct fund management activities to the investment vehicles held by the family office, without having to obtain a license or registration. The SFO will therefore be considered to be a Fund Manager (for the purposes of Singapore’s fund tax incentives) and qualify for certain tax exemptions from Singapore tax on income and gains made in relation to most types of financial assets (excluding Singapore Real Estate). MAS gathers feedback from industry and is considering to allow SFO to use the VCC framework which currently is not accessible by specific exempt managers.

Singapore has a tight labour market and it is expensive to obtain a worker’s permit, especially in intensive sectors. A SFO can, however, apply to the Ministry of Manpower for employment passes which can allow family members to work in Singapore. It’s worth noting that with a strong focus on education, the country’s competitiveness is supported by personnel equipped with the skills needed for a rapidly changing global economy.

Our local team can help with application of associated permits and visa for foreign personnel moving to Singapore including work permits, employment passes, dependent passes, visit passes and permanent resident status.

Living in Singapore
As well as its developed infrastructure and access to professional talent, Singapore is ranked as the second safest city in the world [2]. It also has a world-class education system and has been at or near the top of international leagues tables that measure children’s ability in reading, maths and science. This is an important factor for families especially where wealth is in the hands of next-generation family members.

Future
At the end of September 2021, TMF Group partnered with Private Equity Wire to survey a group of leading General Partner to offer insights into how managers expect this asset class to develop over the next 12 months. Respondents confirmed that the power of proprietary networks could be key to sourcing deals and having boots on the ground with local market expertise and experience will be how to find the right opportunities. Our family office clients have echoed this opinion as they look to establish a presence in new jurisdictions to be closer to where they deploy capital.

There are many exciting opportunities for family offices with an interest in venture capital in Singapore, which is one of the largest tech hubs in Southeast Asia.

Charity
Singapore offers a 250% deduction on donations made to eligible charities. The organisation has to be on the list of approved charities by the Government as Institutes of Public Character (IPCs) for the deduction to be claimable. If the deduction is bigger than the yearly income, it can be carried forward and the remaining amount can be claimed within a maximum of five years.

Succession planning
TMF Group’s recent work with Campden Wealth in September was to understand and highlight themes facing family offices and identify how they can be better supported. 53% of respondents confirmed that they are considering consolidating or restructuring with succussion planning being the standout reason for change.

Singapore has a wealth of professional tax and legal firms with dedicated private client teams to help family offices plan and structure their wealth for the next generation. Its reputation as an international financial hub, strong regulatory framework, stable political and economic environment and pro-business policies with tax incentive schemes (tax exemptions for new businesses, funds, trusts etc.) mean that we can expect that Singapore will continue to be a jurisdiction of choice for families looking to establish or relocate their family office.

TMF Group has been in Singapore for more 20 years, employing more than 150 professional experts on the ground and servicing 1,500 clients. We provide a full range of services in Singapore, including Trust Services, Company Administration and Corporate Secretarial, Accounting and Tax, Capital Market support, Funds and HR & Payroll. As an approved trustee company regulated by the Monetary Authority of Singapore, we provide: Trustee and Trust Administration Services for private and corporate clients and ensure that the structures established remain valid and relevant. At the 2022 Citywealth International Financial Centre Awards, TMF Group were named as the Bronze Winner for Trust Services in Hong Kong and Singapore. 

Sources – [1] and [2] The Economist Intelligence Unit, Safe Cities Index 2019