Singapore unveils tax breaks, visa perks to keep fund sector edge

Singapore is sharpening its appeal to global fund managers with a new package of tax exemptions and visa relaxations, a direct response to intensifying competition from Hong Kong for investment capital and talent.

The Monetary Authority of Singapore (MAS) and the finance ministry announced plans to exempt from tax the investment profits earned by fund managers from managing specified funds, including those of single family offices. Detailed parameters of the exemption are expected in the 2027 budget.

In addition, MAS said it would support hedge funds that are committed to establishing or deepening their presence in the city-state through a dedicated investment programme. The central bank also confirmed that access to the Overseas Networks & Expertise Pass—a five-year work visa that permits holders to work for multiple companies—would be broadened for investment professionals.

The move is widely seen as an effort to narrow the tax gap with Hong Kong, which is advancing its own legislation to extend tax-free carried-interest measures to a broader range of fund houses and individual managers. Hong Kong's government has said it aims to resume the second reading of the tax bill in the second half of this year, with measures taking effect from the 2025/2026 tax year.

The competitive pressure has been building for months. In July, the Alternative Investment Management Association (AIMA), a hedge fund lobby group, warned in a letter to MAS that Hong Kong's proposed tax breaks on performance bonuses for individual fund managers could widen the effective tax gap and make Hong Kong more attractive.

National Development Minister Chee Hong Tat, who is also deputy chairman of MAS, said on Wednesday that it was important to give the industry clarity on the government's plans as firms decide where to locate and expand.

Industry reaction was swift. AIMA's Asia-Pacific co-head, Kher Sheng Lee, said the speed of Singapore's response was notable, calling the measures "compounding the Singapore advantage" for managers, talent, and capital.

Market participants noted that the tax bill submitted to Hong Kong's Legislative Council in June had set alarm bells ringing in Singapore. Some estimated the tax gap between the two hubs could exceed 20% if Hong Kong adopts the exemptions, raising concerns among Singapore-based funds about losing key personnel.

MAS has held meetings with hedge funds in recent months to better understand their needs and preferred tax rates, according to sources familiar with the discussions.

Singapore's asset management industry has grown by an average of 7.5% per year over the past five years, reaching nearly S$7 trillion in assets under management, according to MAS data.