Singapore is increasingly synonymous with family offices. Just consider the high-profile businesspeople who have established family offices in the Southeast Asian country since July 2019: Sergey Brin, cofounder of Google; Ray Dalio, founder of Bridgewater Associates, one of the world’s largest hedge funds; Sir James Dyson, founder of Dyson Limited, a British technology company perhaps known best for its vacuum cleaners; and Zhang Yong and Shu Ping, the couple behind Haidilao International Holding Limited, the world largest chain of Chinese hotpot restaurants. Their family offices are among approximately 200 established in Singapore as of October 2020, collectively managing about $20 billion of assets. And those numbers are set to increase.
So, why Singapore, exactly?
In addition to tax incentives, interest is being fueled by the potential growth in Asia, where many see the island nation as a gateway to the region. Also, many families have been impressed by how Singapore’s government has handled the pandemic and consider it a safe haven of sorts.
Family offices are essentially corporate vehicles established to manage and structure investments with a view of preserving the wealth of a family. In Singapore, family offices have two forms—a single-family office and a multifamily office. A single-family office, which serves one affluent family only, is typically set up by a family and staffed with its own team of professionals to handle the affairs of that particular family. A multifamily office allows the pooling of resources to handle the affairs of two or more families.
To entice more families to set up family offices in Singapore, the government introduced tax incentives allowing family investment vehicles to enjoy tax exemption on specific types of income from designated investments. Specifically, three main tax exemption schemes are the Offshore Fund Tax Exemption Scheme, Onshore Fund Tax Exemption Scheme and Enhanced Tier Fund Tax Exemption Scheme. The salient requirements under these schemes, which are administered by the Monetary Authority of Singapore (MAS), are summarized below: