Singapore Keen to Bolster Wealth Management Sector Through Family Offices
Business Wire India
An announcement on the increasing number of family offices set up in Singapore last week highlights how the Republic woos ultra wealthy families to manage their wealth, says Singapore Incorporation.
HSBC Global Private Bank in South East Asia has mentioned last week that there is a rising trend of family offices that have decided to register a company in Singapore. Singapore Incorporation recognizes that the trend has been boosted by benefits such as tax incentives and an excellent dispute resolution system.
Family offices, which are still a relatively new phenomenon in Asia, are investment structures that assumes the day-to-day administration and management of an ultra rich family’s wealth, which can range in billions of dollars. Family offices paves the way for solutions for the needs of the family as their wealth becomes more complex, and addresses issues of continuous wealth creation and intergenerational wealth transfer.
According to Switzerland’s UBS bank, there are approximately over 400 billionaires in Asia-Pacific. An increasing number of these ultra-high-net-worth individuals are seeking to relocate to Singapore to start family offices, and use the nation as a platform to make long-term investments in the emerging markets of the world.
Affluent families of Asia find Singapore to be an attractive destination for family offices because of the city-state’s tax incentives, fiscal benefits, and an excellent dispute resolution system, according to local law firm WongPartnership.
TAX INCENTIVES
The 2014 Singapore Budget revealed the extensions of various tax incentives schemes for locally managed funds such as Section 13CA, Section 13R, and Section 13X till 31 March 2019. This move has drew many wealthy families to found family offices in Singapore because if not for these tax incentives, any income or capital gains from the funds of the family offices would be subject to greater taxation.
By capitalising on these tax incentives, family offices can obtain exemptions from paying tax in Singapore on designated investments like derivatives, listed securities, and immovable property. These incentives also apply to the fund management of these families overseas assets provided that they are served by Singapore-based family office fund managers. In totality, these incentives have promoted Singapore’s financial standing to the region’s well-heeled families.
Singapore possesses a network of more than 70 comprehensive Avoidance of Double Taxation Agreements (DTAs) that mitigate the double taxation of income earned from the investments of family offices. It also alleviates or exempts tax on some kinds of incomes. In addition, Singapore’s stellar financial stature makes it simple to deploy funds from a Singapore vehicle for investment. This allows well-to-do Asian families to organise their tax affairs efficiently and have their interests better served by creating family offices in Singapore.
EXCELLENT DISPUTE RESOLUTION SYSTEM
This week saw the announcement of a new Singapore International Mediation Centre (SIMC) and Singapore International Commercial Court (SICC) to be inaugurated in Singapore to enhance the spectrum of dispute resolution services available to the global business community. Together with the Singapore International Arbitration Centre (SIAC), family offices are well assured of Singapore’s world-class legal system on resolving any multi-jurisdictional commercial disputes.
The country’s stance as a popular and widely accepted dispute resolution forum augments the confidence of these well-off Asian families that governance structures and proper succession of family businesses are strongly enforced in Singapore’s family offices.
“Family offices in Singapore belong to top-tier clients who are generally very sophisticated, and harbour a long-term perspective on investing. Thus, the combined availability of tax incentives, fiscal benefits, and an excellent dispute resolution system makes Singapore very ideal for the incorporation of family offices", explained Ms. Jane Koh, Marketing Manager at Singapore Incorporation.