Why Family Offices & Investment Holding Companies are Popular in Singapore?

3 min read|Last Updated: May 17, 2024|

A thriving economy in Asia, Singapore presents an ideal destination for investors and high-net-worth individuals to park their money there. Not only does it provide sound investment opportunities, but it is also one of the best places to live. This article gives you more information about family offices in Singapore.

As such, family offices and investment holding companies are booming in Singapore. Find the differences and the advantages of setting up an investment holding company and/or family office.

Differences Between Family Office & Investment Holding Company

The difference between a family offices in Singapore and an investment holding company is as below:

  • Family office – manages the wealth, insurance, trusts, and estate
  • Investment holding company – portfolio of business equity stakes

There are 2 types of family offices:

  • Single-family office (SFO) – the management of only one family
  • Multiple family office (MFO) – privately owned organisation that provides management services for more than one family

What are the Advantages of Having a Family Office/Investment Holding Company in Singapore

What makes Singapore an attractive location for setting up a family office? The advantages of doing so are below.

  1. Singapore tax system
    A key consideration when setting up a family office is how tax-efficient and flexible the jurisdiction is when it comes to moving or divesting these family assets and investments.
    In Singapore, the tax system is quasi-territorial, meaning only income generated from Singapore will be taxed while foreign-sourced income is exempted.
  2. Low corporate tax rates
    The corporate tax rate in Singapore is very competitive at just 17%, as compared to other countries.
  3. Tax incentives
    If your funds are managed by a local SFO company in Singapore, there are also tax exemptions that you can enjoy on a broad range of income-these include, amongst others:

    • Equities
    • Bonds
    • Immovable properties
      For investment holding companies in Singapore, various tax incentives are initiated by the Singapore government that are industry and investment-specific.
      There is also tax exemption on the first earned 100k SGD in the first three years after incorporation.
  4. Double tax treaties
    Singapore has many double-tax treaties and agreements with different countries. This means that you will be exempted from tax on certain types of income and avoid being taxed in two different jurisdictions.
  5. No capital gain tax
    Capital gains from selling your stocks, bonds, and properties are not taxed in Singapore.
  6. Best-in-class infrastructure & connectivity
    Singapore is well-known for its modern infrastructure strong business connectivity, and political environment, making it a safe and attractive location.
Wan Yi

Tax Incentives for Singapore Family Office

There are 3 key tax incentives for setting up a family office in Singapore:

  1. Enhanced-tier fund tax incentive scheme (section 13X of Income Tax Act)
    • Anyone can be the fund resident
    • No restrictions on investors
    • Fund manager must hold a CMS license in Singapore
    • Minimum S$50 million Asset Under Management required
    • Minimum local business spending of S$200,000 a year
    • No reporting required
    • Must approve by the Monetary Association of Singapore (MAS)
    • Eligible to apply for 3x Singapore Employment Passes
  2. Onshore fund tax incentive scheme (section 13R of Income Tax Act)
  3. Global Investor Program Family Office

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FAQs

What is Singapore’s income tax rate?2021-09-06T15:44:02+08:00

Singapore’s personal income tax rates for resident taxpayers are progressive. This means higher income earners pay a proportionately higher tax, with the current highest personal income tax rate at 22%

Why is it necessary for Singapore to have tax exemptions on international air travel and shipping income?2021-09-06T15:43:25+08:00

The countries to which these tax exemptions apply are heavily involved in shipping and air routes to and from Singapore. Therefore, these exemptions encourage the people of these countries to continue to engage with and conduct business activities in Singapore.

Why must Singapore have Tax exemptions on International aire travel and shipping income?2020-06-22T11:38:39+08:00

The countries to which these tax exemptions apply are heavily involved in shipping and air routes to and from Singapore. Therefore, these exemptions encourage the people of these countries to continue to engage with and conduct business activities in Singapore.

What are the most recent changes to Singapore’s income Tax Rates?2020-06-22T11:36:06+08:00

Singapore’s current maximum personal income tax rate is 22%. This represents an increase from the prior maximum rate of 20%. On the other hand, the corporate income tax rate has steadily declined over the years. It once sat at 26% but is now at 17%.

Which Business Entities do not qualify for the Start-up tax exemption scheme?2021-09-06T15:42:42+08:00

Not all business entities in Singapore are eligible for the government’s tax exemption. Only private limited companies, foreign subsidiary companies, foreign branch companies, and Singapore offshore companies qualify for it. Therefore, business entities such as sole proprietorships, partnerships, and limited liability partnerships may not receive the tax exemption.

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