由香港证监会第1, 第4及第9类别及新加坡金融局CMS所发牌
Understand the Global Investor Program (GIP), 13X, 13R Schemes
With the recent rise of wealth here in Asia over the past couple of decades, many affluent families are now starting to think about transitioning to the next generation. However, at this current juncture there is still a relative lack of structure in how to properly do so.
Singapore, being one of Asia’s most prominent financial hubs, has latched on to this trend and have provided several enticing policies to welcome these families to use it as a base to manage their assets by promoting the family office sector in Singapore. Here at Raffles Family Office, we provide a plethora of solutions and frameworks that allows for families to leverage on these policies to ensure tax compliance and efficient asset management.
The Singapore Government has provided tax exemption incentives for funds managed by family offices. As such, the funds managed by family offices will not pay Singapore income tax on almost all investment gains. Below are the supporting policies:
1. Onshore Fund Tax Incentive Scheme (13R)
2. Enhanced-Tier Fund Tax Incentive Scheme (13X)
3. Global Investor Program Family Office Option (GIP – FO)
The 13R and 13X schemes under the Singapore Income Tax Act (SITA) is overseen by the Monetary Authority of Singapore. Successful applicants of the scheme will be granted employment passes and tax exemptions on specified income from designated investments derived by an approved company/person arising from funds managed by a Singapore based fund manager.
Key features and requirements of the schemes respectively:
| 13R | 13X |
Fund’s Residence | Singapore Tax Resident | No Restrictions |
Fund Manager | Singapore based with a CMS license (Raffles) | |
Investors | Cannot be 100% Owned by Singaporean | No Restrictions |
Asset Under Management (AUM) | No Restrictions | Minimum S$50Million |
Fund Expenditure | Minimum S$200K business spending in a year | Minimum S$200k Local business spending in a year |
Approving Authority | MAS approval required (no change of investment mandate after approval) | |
Reporting requirements | Annual reporting to investors | No reporting required |
Income Tax Filing | Annual Tax returns to IRAS | |
Number of employment passes | 1 | 3 |
Aside from the attractive tax benefits that these 2 schemes provide, they also enable investors access to employment passes (1 for 13R and 3 for 13X). Investors who are looking for potential immigration solutions can use these employment passes as a start to their eventually permanent residency applications.
Simple structure of 13X Scheme:
Furthermore, the 13R and 13X schemes have also been earmarked to be part of the new Variable Capital Companies (VCCs) program – flexibly structured entity for investment funds, launched by the MAS to position Singapore as a regional domiciliation hub. Raffles Family Office hopes to be one of the first family offices in Singapore to join the VCC program, allowing our clients first access to this new framework.
- VCCs allow for greater structural and operational flexibility. It allows for a master umbrella structure with various sub funds under it.
- Allows for share redemptions from NAV and dividend distribution from capital
- VCC shareholders register will not be publicly available, offering privacy to investors.
Alongside the 13R and 13X schemes, the Economic Development Board (EDB) of Singapore has also introduced the Global Investor Program (GIP). This program also allows for investments to be tax exempt and for investors to potentially acquire permanent residency here in Singapore. Under the GIP scheme is an option that is specifically designed for family offices – invest at least S$2.5 Million (paid up capital) in a Singapore based Single Family Office having an AUM of more than S$200 Million. To be eligible to invest under this option, investors are required to have:
- At least 5 years of entrepreneurial, investment or management track record and;
- Individual or direct family net worth of more than S$400 Million
Investors must also submit a 5-year business plan outlining projected employment and annual financial expenditures. It should also explain: functions of its family office, proposed investment sectors, asset types and geographical focus.
Evidently, Singapore has realized the growing need of such schemes and policies by more and more wealthy Asian families. As such, they are fully utilizing this opportunity to attract new investors into Singapore. Raffles Family Office is fully equipped to advise and cater to clients who are interested in pursuing the above options. These enticing policies along with the conducive business environment in Singapore provides for a win-win situation for all parties involved.
This material is provided for informational purposes only, it does not constitute an offer to sell, or a solicitation or an offer to buy. The copying, saving or other reproduction, adaptation, modification, transfer, assignment, other utilisation or exploitation of the content or parts thereof without the prior written permission of the Raffles Assets Management (HK) Co. Ltd is strictly prohibited.
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