Singapore will introduce tax exemptions on profits earned by fund managers and make it easier for investment professionals to obtain visas as it seeks to head off growing competition in the asset management sector, the central bank said on Wednesday.
The Monetary Authority of Singapore and the finance ministry plan to exempt from tax, investment profits earned by fund managers from managing certain funds, including those of single-family offices. More details will be announced in the 2027 budget.
MAS also said it would support hedge funds “committed to establishing or deepening their presence in Singapore” through an investment programme.
The planned tax breaks could put Singapore on a par with regional rival Hong Kong, which is moving to expand tax-free carried-interest measures to a broader range of fund houses and individual fund managers in a bid to attract investment funds and talent.
The move underscores intensifying competition between Asia’s two biggest financial centres.
The Alternative Investment Management Association (AIMA), a hedge fund lobby group, warned in a letter to MAS in July that Hong Kong’s proposed tax breaks on performance bonuses for individual fund managers would widen the effective tax gap with Singapore and make Hong Kong more attractive.
National Development Minister Chee Hong Tat, who is also deputy chairman of MAS, said on Wednesday it was important to give the industry visibility on the government’s plans as firms weighed where to locate and expand their businesses.
Hong Kong’s government said last week that the Chinese-ruled city aims to resume a second reading of the tax bill in the Legislative Council in the second half of this year, with the measures taking effect from the 2025/2026 tax year.
Heating up competition
“Every allocator watching around the world just heard it,” said Kher Sheng Lee, AIMA’s Asia-Pacific co-head, citing the speed of Singapore’s response.
“The measures are compounding the Singapore advantage – the agenda for managers, talent, capital,” he said.
Market participants said the tax bill submitted to Hong Kong’s Legislative Council in June had set alarm bells ringing in Singapore.
They said the tax gap between the two financial hubs could exceed 20% if Hong Kong adopts exemptions on performance bonuses, fuelling concerns among Singapore-based funds about losing talent.
MAS has held meetings with hedge funds in recent months to better understand their needs and preferred tax rates, sources told Reuters.
MAS and the manpower ministry also said they would expand access to Singapore’s Overseas Networks & Expertise Pass for investment professionals.
The visa is valid for up to five years before renewal and allows holders to work for multiple companies.
Singapore’s asset management industry has grown by an average of 7.5% per year over the past five years to nearly S$7 trillion, MAS data shows.
Reuters
