Singapore has unveiled a package of incentives aimed at retaining and attracting asset managers, responding to tax breaks recently introduced by regional rival Hong Kong in the global competition for financial-sector talent. The Monetary Authority of Singapore (MAS) said on Wednesday it plans to remove the tax paid by investment professionals on profits from fund-management services — a move that could prove wider-reaching than the carried-interest tax cuts Hong Kong is bringing in. MAS also said it would set up an investment programme to provide capital to hedge fund managers operating in Singapore, and would loosen visa requirements for senior fund-management staff.
“We do need to take a look at what is happening in the global landscape in reviewing and adjusting our own policies,” said Chee Hong Tat, Singapore’s minister for national development and MAS deputy chair. Hong Kong triggered the latest round of competition with sweeping changes to its carried-interest tax rules — potentially allowing asset managers to earn performance fees entirely tax-free — that have been described as a “big bang” of industry reform. The Financial Times reported last month that Singapore was already in talks with fund-management firms about its own reforms, after the Alternative Investment Management Association warned MAS that member hedge fund and private equity firms in Singapore were considering relocating senior staff to Hong Kong to capture the incoming tax cuts.
MAS did not detail the size or cost of the new measures, saying further specifics on the tax changes will come at next year’s budget; people familiar with the plans said the exemptions could potentially cover a broader range of investment workers than Hong Kong’s scheme. Singapore’s fund-management industry has grown by an average of 7.5% a year over the past five years, taking assets under management to nearly S$7 trillion (US$5.5 trillion), and now accounts for 15% of financial-services-sector output and 13% of its employment. Chee said Singapore does not view its competition with Hong Kong as zero-sum, adding that “the measures that we are announcing today reflect our continued commitment to strengthen Singapore’s value proposition and ensure we remain a trusted, vibrant and globally competitive financial hub.”
