By Alice Quek, Private Client Services Director at Hawksford.
Family Offices structures in Singapore increased 5 times between 2017 and 2020 as affluent families choose Singapore as the preferred destination to set-up their Single Family Office. Alice Quek, Private Client Director at Hawksford's Singapore office talks us through the benefits and tax efficiencies of setting up a Single Family Office when structuring wealth and managing assets.
A Single-Family Office usually refers to an entity which is set up to manage the assets of an Ultra High Net Worth Individual and their families. The Single Family Office manages assets for and on behalf of only one family, and is owned and controlled by family members. The family's trusted advisors such as bankers, asset managers, lawyers and tax advisors may be hired a Single Family office to manage their assets.
SFOs usually manage assets of more than US$200 million and activities undertaken may include investments, philanthropy, succession planning, family governance, and tax reporting
Most of these UHNWIs and families face the challenges of wealth transfer and succession planning, as the younger generation is highly mobile and may wish to pursue their own career interests outside of the family business.
As the economy in Asia has experienced exponential growth over the last five to ten years, so too has the accumulation of wealth by families in Asia. There are now a large percentage of the world's billionaires located in China, Hong Kong, Taiwan and Singapore according to Forbes. With this rise in wealth comes increased demand for wealth structuring and succession planning solutions in stable financial centres such as Singapore. According to Asian Investor, the Hong Kong government is also planning to make changes to tax rules for Hong Kong family offices and raise the territory's appeal as wealth hub, however, this may take some time to come to fruition.
Singapore has been well established as one of the leading private banking and wealth management centres globally and in Asia. Not only is Singapore the most preferred offshore wealth hub among industry professionals, according to Asian Private Banker survey, it is also been ranked, #2 as an International Wealth Management Centre globally in competitiveness and performance, according to the Deloitte International Wealth Management Centre Rankings.
Singapore's comprehensive financial regulations and laws, favourable tax incentives, along with its political and economic stability make the island nation a very attractive jurisdiction for all types of organisations, ranging from multinational companies to family offices
Singapore has some of the most competitive tax regimes in the world; Corporate tax is charged at a flat rate of 17% and the highest marginal tax rate for individuals is 22%. Singapore does not impose capital gains and estate tax and has signed an extensive network of double tax and investment treaties which make it an attractive wealth hub for High-Net-Worth Individuals and families from all over the globe.
Assets and funds managed by an SFO in Singapore can also benefit from tax exemption on income; In particular, the fund management tax incentives granted under Sections 13CA, 13R, and 13X of the Income Tax Act. To learn more about these exemptions, please connect Hawksford's Director of Private Clients Asia, Alice Quek.
A Single Family Office structure that provides financial advisory services to its related corporations may rely on an existing exemption from licensing under regulation 27(1)(b) of the Financial Advisers Regulations, an example of an ownership structure for an SFO which could fall under this exemption is demonstrated below:
This example is for illustrative purposes only and does not constitute as legal advice.
The Singapore Economic Development Board has developed Singapore's Global Investor Programme (GIP), which grants Permanent Resident (PR) status to eligible global investors who intend to drive their business and investment growth in Singapore. Under the GIP, investors who allocate S$2.5 million or more into a new or existing Singapore-based SFO with assets under management of S$200 million or more, may be eligible for permanent residency status, the expectation is that, to qualify for PR status, UHNWIs and their families may need to establish SFOs within Singapore.
At Hawksford, we understand that navigating the eligibility criteria and collating documents for global investor programmes can be a long and complex process, that's why we have a dedicated team that can work closely with our clients and their advisers and with government institutions such as the Economic Development Bureau of Singapore (EDB) to follow best practice when applying for PR status. To learn more about our comprehensive immigration solutions at Hawksford, you can contact us at firstname.lastname@example.org.
When forming a family office strategy, structuring and governance which might include involvement and facilitation of family meetings and generational education and planning, and philanthropy planning, families often find it invaluable to have expertise facilitation that is one degree removed from current family dynamics and focused on the long-term objectives and interests.
Outsourced administration: bookkeeping, bill payments, financial statement preparation and other lower value tasks are essential, but often very time-consuming; Many families prefer to outsource such labour-intensive aspects cheaply and effectively while they focus efforts on more interesting decisions and strategies.
Estate, tax and trustee services: requiring technical expertise and sophistication, it can make a lot of sense to outsource these services to experts with a level of knowledge and experience that brings an additional layer of comfort to family members. The role of a private family office is to unify and consolidate the often complex and varied affairs of a family; Some banks and investment houses may offer what they call a family office, primarily covering financial services, however, at Hawksford mean something much wider - and not just limited to investments and trust and company administration, but we can provide a lean or comprehensive operation, depending on requirements.
This article is intended for general information only and is not intended to apply to constitute legal advice. Hawksford accepts no liability for any errors or for any loss, of any nature, to any person by reliance on this article.
Contact Hawkford's Singapore Private Family Office today for more information on our Customised Family Office Services
Director, Private Client Services Asia
T: +65 6704 9189 | E: email@example.com | firstname.lastname@example.org
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