What’s in this article
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.
- 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. - Low corporate tax rates
The corporate tax rate in Singapore is very competitive at just 17%, as compared to other countries. - 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.
- 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. - No capital gain tax
Capital gains from selling your stocks, bonds, and properties are not taxed in Singapore. - 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.
Tax Incentives for Singapore Family Office
There are 3 key tax incentives for setting up a family office in Singapore:
- 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
- Onshore fund tax incentive scheme (section 13R of Income Tax Act)
- Fund resident must be a Singapore tax resident
- Fund manager must hold a CMS license in Singapore
- Minimum spending of S$200,000 per year for Asset Under Management
- Must obtain approval from the Monetary Association of Singapore (MAS)
- Must not be 100% by a Singaporean
- Business annual reporting & annual tax returns are required
- Eligible to apply for 1x Singapore Employment Pass
- Global Investor Program Family Office
FAQs
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%
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.
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.
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%.
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.
