10/07/23

FAMILY OFFICES: The Gloves Are Off: Hong Kong Vs. Singapore And The Fight To Lure Family Offices

As published on: forbes.com, Monday 10 July, 2023.

Things are heating up between Hong Kong and Singapore and their efforts to attract family offices into their respective jurisdiction. The two leading financial centers in Asia have made several moves in the first half of the year in their quest to become the Asian family office hub, activity that emphasizes the growing significance of the family office ecosystem and how its shaping the wealth management industry.

The Battle Arena: Hong Kong and Singapore

Hong Kong has over 400 family offices and aims to attract over 200 in the next two years through new tax incentives as well as a recently launched dedicated family office service provider network. At their Wealth for Good summit earlier this year they outlined how this network aims to better connect family offices with private banks and other professional services focused on family offices.

They also announced new tax incentives that exempt single family offices from the 16.5% tax on profits from specified transactions across securities, futures, forex and a host of other investment vehicles, while adding in the offer of residency in Hong Kong for investors and their families.

Much of this seems in response to Singapore, which already had over 1,100 family offices registered for tax incentives at the start of the year and launched their own support network in 2021, the Global-Asia Family Office Circle. Singapore is also benefiting from an influx of ultra high net worth individuals coming directly from Hong Kong, which has added geopolitical tensions to complicate its situation. This growth in new family offices has also led to the creation of over 1400 jobs for Singaporeans and PRs.

This momentum is helped by Singapore’s reputation as a favorable destination for wealth owners around the globe: some of the notable Singapore family offices established include US investor Ray Dalio, Google co-founder Sergey Brin as well as Indian billionaire Mukesh Ambani. Family offices have boomed in Asia in the last decade, with almost a quarter of family offices less than two years old, so the latest incentives by Hong Kong are a timely and necessary move in the competition with Singapore.

But shortly after they were announced, the Monetary Authority of Singapore (MAS) announced they would add further improvements to its tax incentive scheme. These were announced last week, including adjustments to encourage single family offices to invest in finance structures that directly benefit the city-state, with expanded tax incentives to encompass all investments in non-listed companies operating in Singapore. There’s also expansive tax incentives for both climate-related projects and to promote philanthropic activity by family offices.

It awaits to be seen how Hong Kong will respond to this but with family offices a vital engine for growth for wealth management professionals, banks, trusts and other legal and tax advisory services, not to mention sectors directly and indirectly related to the lifestyle of the family members, a response is almost certain.

The tussle between these two cities is set to evolve over the next decade with the winner positioned as the heart of private wealth management in Asia, the city that can best help manage, preserve and grow the wealth of the most affluent families. With each new family office that is established there and each move they make in an effort to promote themselves as the better destination, these two cities take a step towards securing their stake in the future of global finance.

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Hong Kong Singapore Family Offices