Singapore's Monetary Authority (MAS) is reportedly in discussions to reduce taxes for fund managers, a strategic move aimed at bolstering the city-state's position as a leading financial hub. This initiative comes in response to concerns voiced by fund executives that Hong Kong's proposed tax reforms, specifically exemptions on carried interest, could prompt financial institutions to relocate.
One of the key measures under consideration by MAS is lowering the tax rate under a specific incentive scheme. This would allow investment institutions to pay 10% of Singapore's standard corporate tax rate of 17%, with the tax savings potentially passed on to portfolio managers. This competitive action is part of a broader effort by Singapore to attract international companies and executives, mirroring steps taken by Hong Kong which has already simplified bureaucratic processes for family offices, embraced cryptocurrencies, and suggested looser rules for mutual funds.
Singapore has recently revised its flagship fund tax incentive schemes, Sections 13O and 13U, with updated eligibility criteria taking effect in 2025. While these revisions tightened qualifying conditions, the new discussions signal a willingness from MAS to offer targeted concessions to attract specific types of managers, particularly those overseeing larger, institutionally-focused strategies. The city-state's Budget 2026 also included a 40% corporate income tax rebate for active companies and allocated a fresh $1.5 billion to MAS's Equity Market Development Programme (EQDP) to enhance the liquidity and breadth of the Singapore Exchange.
The S$1.5 billion EQDP allocation is particularly noteworthy, as successful deployment could create a virtuous cycle: deeper markets attracting more institutional managers, who in turn bring more capital, further deepening the markets. Singapore's central bank is actively negotiating with investment firms, demonstrating its intent to make the city-state the premier asset management hub by being willing to negotiate on taxes.
