Singapore plans to offer tax breaks for fund managers to strengthen the country's competitiveness as a hub for asset management services, following similar proposals by Hong Kong in June.
The proposed measures include tax exemptions for profit-related returns on certain fund management services, a new hedge fund investment program, and a relaxed visa system for global leaders and senior professionals in the asset management industry, the Monetary Authority of Singapore said in a press statement on Aug. 19. The tax exemption will apply to a share of investment profits earned by fund managers and investment professionals when they deliver strong returns for investors in qualifying funds, the regulator said, adding that it does not apply to salaries, bonuses or other forms of employee remuneration.
"As a package, the three measures aim to incentivize key asset managers to anchor their business activities, capital allocation and talent deployment in Singapore," the MAS said. More details of the plan will be announced in the island nation's budget, which is usually presented in February.
The asset management industry is a key growth engine for Singapore's financial sector, accounting for about 15% of the sector's output and 13% of employment. Over the past five years, the industry grew by 7.5% per year on average to almost S$7 trillion (US$5.48 trillion), the MAS said.
"This set of measures builds on the industry's positive growth momentum, and will help anchor high value asset management activities, deepen industry capabilities and attract top asset management talent, amidst growing international competition."
The government in Hong Kong, Singapore's key rival financial hub in the Asia-Pacific region, recently announced a new legislative bill proposing tax exemptions for privately offered funds, family-owned investment holding vehicles and carried interest. The proposed new rules are aimed at "attracting more funds and family offices to establish a presence in Hong Kong," according to proposals in a June 9 legislative council brief.
Under the proposed new rules, Hong Kong will offer tax exemptions to a wide range of alternative asset managers on carried interest, or the investment profits paid to fund managers.
Hong Kong's assets under management reached HK$35.1 trillion (US$4.48 trillion) as of end-2024, according to the proposals.
"As the world's largest cross-border wealth management center and Asia's largest hedge fund hub, Hong Kong ranks first globally in the investment management sector under the Global Financial Centers Index," it said.
Singapore and Hong Kong are vying for assets and talent as global hedge funds seek to tap growing wealth in the Asia-Pacific. The rival financial hubs have seen an increase in global professionals seeking to move in, driving up property rentals and visa applications.
