Leading Innovations in Singapore

Singapore has established itself as a thriving hub for innovation, attracting foreign investment from around the world. With its strategic location, strong infrastructure, and supportive business ecosystem, the city-state has been successful in fostering groundbreaking innovations across various sectors. In this article, we will explore some of the leading innovations in Singapore that have been instrumental in attracting foreign investment.

1. Smart Nation Initiative

At the forefront of Singapore’s innovation drive is the Smart Nation Initiative. This government-led initiative aims to harness technology and data to improve the quality of life for citizens and enhance the efficiency of various sectors. The development of smart infrastructure, digital services, and initiatives like the National Digital Identity and Smart Mobility have positioned Singapore as a global leader in smart city solutions. Foreign investors are drawn to the opportunities presented by Singapore’s advanced digital infrastructure and its potential for creating innovative solutions.

2. Biomedical Sciences and Healthcare

Singapore has made significant strides in the biomedical sciences and healthcare sector. The establishment of research institutes, biomedical parks, and partnerships with leading global pharmaceutical companies have created a conducive environment for innovation. The Biopolis and the upcoming Health City Novena serve as hubs for research, development, and commercialization of biomedical technologies. The availability of world-class research facilities, a strong talent pool, and supportive government policies have attracted foreign investors seeking to capitalize on Singapore’s expertise in precision medicine, medical technology, and digital health.

3. FinTech and Financial Services

Singapore has emerged as a prominent FinTech hub in Asia, attracting foreign investment in the financial services sector. The Monetary Authority of Singapore (MAS) has implemented progressive regulatory frameworks, including the FinTech Regulatory Sandbox, to facilitate experimentation and innovation in the financial industry. The establishment of innovation labs, accelerators, and FinTech-focused initiatives like the Singapore FinTech Festival have further bolstered the ecosystem. Foreign investors are enticed by the opportunity to tap into Singapore’s robust financial infrastructure, strong regulatory environment, and access to a diverse and tech-savvy consumer base.

4. Advanced Manufacturing and Robotics

Singapore has embraced advanced manufacturing and robotics as key drivers of economic growth. The development of initiatives like the Advanced Remanufacturing and Technology Centre (ARTC) and the Advanced Manufacturing Training Academy (AMTA) has fostered innovation in areas such as additive manufacturing, robotics, and automation. Singapore’s focus on research and development, coupled with its strong intellectual property protection, has attracted foreign investors looking to leverage the city-state’s expertise in manufacturing excellence and automation technologies.

5. Sustainable Solutions and Clean Energy

As sustainability becomes a global priority, Singapore has positioned itself as a hub for sustainable solutions and clean energy innovations. The Sustainable Singapore Blueprint and initiatives like the Singapore Green Plan 2030 demonstrate the city-state’s commitment to environmental sustainability. Singapore is investing in research and development of renewable energy technologies, waste management solutions, and sustainable urban planning. Foreign investors are drawn to Singapore’s commitment to sustainability, favorable regulatory environment, and opportunities for collaboration in developing innovative clean energy solutions.

Singapore’s leading innovations across various sectors have played a significant role in attracting foreign investment. The city-state’s commitment to creating a conducive environment for research and development, strong government support, and advanced infrastructure have positioned it as an attractive destination for innovation-driven enterprises. As Singapore continues to foster groundbreaking advancements in areas such as smart cities, healthcare, FinTech, advanced manufacturing, and sustainability, foreign investors can look forward to a wealth of opportunities to collaborate and grow their businesses in this innovation hub of Asia.

13O 13U

Singapore Tax Incentive Schemes for Fund and Fund Managers

Singapore’s status as a prominent Asian hub for fund management can be attributed, in part, to its comprehensive tax incentive schemes. Many global fund houses have recognized Singapore as an ideal regional hub, choosing to establish their portfolio management, trading, and research operations within the country.

To solidify its position as a leading Asian fund management and domiciliation hub, the Monetary Authority of Singapore (MAS) is strategically leveraging its external fund management program to enhance asset management capabilities within Singapore. Concurrently, MAS collaborates closely with industry stakeholders to position Singapore as a prominent regional hub for fund domiciliation, an objective facilitated by the implementation of the Singapore Variable Capital Company (VCC) framework. Moreover, Singapore’s attractive tax framework and incentives for funds and fund managers serve as key catalysts in these endeavors.

It is important to note that funds managed by Singapore-based fund managers may be subject to tax in Singapore due to the investment management activities performed within the country. The income and gains derived by these funds could be deemed Singapore-sourced and thus subject to taxation, contingent upon the onshore or offshore classification of the fund and its taxable presence in Singapore. However, Singapore’s tax incentives aim to alleviate such tax obligations, provided that specific conditions are met.

Singapore’s conducive regulatory environment, extensive array of service providers, and favorable tax incentives have collectively contributed to the sustained growth and attractiveness of its fund management industry. By offering these enticing features, Singapore continues to establish itself as a premier destination for fund management within the Asian region.

Singapore Tax Exposures for Funds:

Funds managed by a fund manager in Singapore may be subject to tax in the country due to their investment activities. The income and gains generated by these funds may be considered Singapore-sourced and taxable, depending on whether the fund is based onshore or offshore. However, Singapore offers tax incentives that can eliminate these tax liabilities if certain conditions are met.

Tax Incentive Schemes in Singapore for Funds:

All fund management companies in Singapore must be licensed and registered with the Monetary Authority of Singapore (MAS). This requirement is necessary to qualify for the tax incentive schemes.

Under these schemes, certain income derived from funds managed in Singapore by a fund manager is exempt from taxation. The investments covered under these schemes include stocks, company shares, bonds, notes, commercial papers, treasury bills, certificates of deposit, derivatives, and more. However, immovable property in Singapore is not eligible for these incentives.


MAS Announces Stricter Criteria for Singapore’s 13O and 13U Fund Management Tax Incentive Schemes

Singapore’s Monetary Authority of Singapore (MAS) recently announced significant changes to the criteria for the Section 13O and 13U fund management tax incentive schemes. These changes are targeted at fund vehicles managed by family offices. The new criteria will take effect from 18th April 2022, and it is important for potential applicants to be aware of these changes and consider their options promptly.

Cases Covered by the New Criteria

The new stricter criteria will apply to cases where the first “preliminary submission” is made from 18th April 2022. However, cases that have already been granted the Section 13O or 13U awards by MAS or are in the process of application will generally not be affected. It’s worth noting that if a pending application has been stagnant with no communication with MAS for six months or more, MAS may require the application to be restarted under the new criteria.

Enhancements to the Award Criteria

For Section 13O Cases

  • The fund must now have a minimum fund size of S$10 million at the point of application and must commit to increasing its assets under management (AUM) to S$20 million within two years.
  • The family office must have a minimum of two investment professionals (IPs), with a grace period of one year to employ the second IP.
  • The absolute minimum total business spending annually remains at S$200,000, but this is subject to a new ‘tiered business spending framework’ pegged to AUM size.

For Section 13U Cases

  • The existing minimum fund size of S$50 million at the point of application remains unchanged.
  • The family office must have at least three IPs, with at least one IP being a non-family member. A grace period of one year may be given for the non-family member IP.
  • The absolute minimum local business spending annually is raised to S$500,000 (from S$200,000) in any basis period, and is also subject to a new ‘tiered business spending framework’ pegged to AUM size.

Common Requirements for both Sections 13O and 13U

Both Section 13O and 13U cases now have a new requirement for the fund to make local investments. This must constitute at least 10% of the fund’s AUM or S$10 million, whichever is lower, at any given time. Local investments include equities listed on Singapore-licensed exchanges, qualifying debt securities, funds distributed by Singapore-licensed/registered fund managers, and private equity investments into non-listed Singapore-incorporated companies with operations in Singapore.

If you’d like to read the full article and get more insights into the changes announced by MAS, you can find it here.

Disclaimer: This article is provided for informational purposes only and does not constitute legal advice. Professional legal advice should be sought before making any decisions or taking any actions based on the contents of this article.




Singapore Family Office

A family office is an organization created to manage the wealth and investments of a high net worth family or individual. It provides a range of services such as investment management, tax planning, philanthropy, and estate planning. Singapore is an attractive location to set up a family office due to its stable economy, favorable tax policies, and business-friendly environment.

The following is a step-by-step guide to setting up a family office in Singapore:

Step 1 : Define your objectives

Before setting up a family office, it is important to determine the objectives of the office. This includes identifying the family’s current and future financial needs, goals, and priorities. This will help in determining the type of services required from the family office.

Step 2: Choose the right structure

The next step is to choose the right structure for the family office. The most common structures are a single-family office, which is created for a single family, or a multi-family office, which serves multiple families. Other options include a private trust company or a corporate entity. Each structure has its own advantages and disadvantages, so it is important to choose the one that best fits the family’s objectives.

Step 3: Determine the regulatory requirements

Family offices in Singapore are regulated by the Monetary Authority of Singapore (MAS). The regulatory requirements will vary depending on the structure of the family office. For example, a single-family office may not be required to be licensed by the MAS, while a multi-family office will require a capital market services license. It is important to seek professional advice to ensure compliance with the regulatory requirements.

Step 4: Choose the right service providers

Once the structure has been determined and regulatory requirements have been met, the family office will require the services of various professionals such as lawyers, administrators, accountants, and investment managers. It is important to choose service providers who are experienced in working with family offices and have a good understanding of the family’s objectives.

Step 5: Implement the family office

Once all the steps above have been completed, the family office can be implemented. This include establishing policies and procedures, hiring staff, and setting up systems for investment management, accounting, and reporting. It is important to ensure that the family office is structured in a way that is flexible and can adapt to changing circumstances.

In conclusion, setting up a family office in Singapore can be a complex process, but with proper planning and guidance, it can be accomplished efficiently. It is important to define the family’s objectives, choose the right structure, determine the regulatory requirements, choose the right service providers, and implement the family office. Seeking professional advice is essential to ensure compliance with regulatory requirements and the successful implementation of the family office.

Singapore Variable Capital Company VCC

Transforming a small sovereign country in Asia into a financial powerhouse

The Singaporean Variable Capital Company Act, or VCC Act, is one of the most significant developments in Asian finance to occur in recent years. Administered by the Accounting and Corporate Regulatory Authority of Singapore (ACRA), this legislation opens an entirely new world for foreign and domestic funds seeking to incorporate Asian investment instruments into their portfolios.

Offering a highly flexible fund structure, the VCC is poised to solidify Singapore’s position as the de facto financial and investment capital of Asia. First piloted in 2019 with the inclusion of 18 fund managers, the VCC Act officially went live on January 15th, 2020. Launching or redomiciling a VCC in Singapore is a straightforward process that is doable via the ACRA website. To ease the financial burden of registration, the Monetary Authority of Singapore (MAS) has launched a Variable Capital Companies Grand Scheme program.
This program will co-fund up to 70% of incorporation or registering expenses, so long as they are paid to a Singapore-based service provider.

One of the most attractive benefits of using the VCC structure is the ability to issue a fund as a stand-alone entity or an umbrella entity. The former is comprised of a single investment portfolio and is a relatively traditional format for a fund. A VCC umbrella fund is much more dynamic and allows investors to issue various segregated sub-funds, all held under the same umbrella investment fund. Part 4, Subsection 29 of the VCC Act, is one of the essential sections of the Act that touches on umbrella funds.

This section states that the segregation of sub-funds means that the liabilities are self-contained to each specific sub-fund. If one sub-fund goes under, the other sub-funds within the same umbrella fund are not affected.

Both open and closed funds are available for registration under the new VCC Act. Open-ended funds can issue an unlimited number of shares, which are generally priced daily based on the fund’s net asset value (NAV). Open-ended funds are usually more liquid and hold diversified portfolios. Close-ended funds raise a fixed amount of capital and publicly trade on secondary markets. This fund style generally entails higher yields than their open-ended counterparts and are priced more frequently than once per day. Each of these fund styles has relative pros and cons, and Singapore’s VCC Act allows investors exposure to both types.

The United States represents a significant portion of the investment world. With portfolios becoming increasingly globalized, any legal framework is well-advised to consider how to incorporate US investors with relative ease. Bringing previously off-shore capital into on-shore funds is often best accomplished using the “check the box” rules associated with IRS Form 8832. These rules allow entities to be treated by the US as “pass-through” entities, offering US investors an enticing level of inclusion. While the legislation is still young, Singapore’s VCC Act allows US investors to take advantage of this attractive election opportunity.

Investors may wish to make the permanent move and redomicile in Singapore, given its emerging status as the de facto entry point to Asian financial markets. If a company is already doing business in Singapore, redomiciling allows for complete business continuity and confers many tax benefits. It is important to note that redomiciling in Singapore is irrevocable as there are currently no provisions for entities incorporated in Singapore to redomicile overseas.

While this means redomiciling is a permanent decision, the VCC Act demonstrates that the city state’s financial environment is further liberalizing, conferring both business and legal benefits for any entities that decide to redomicile in Singapore.

If a company is already doing business in Singapore, redomiciling allows for complete business continuity confers many tax benefits.

The subject of taxation naturally entails bilateral and multilateral trade agreements, of which Singapore has many. Singapore beats out most other nations in terms of tax treaties with 86 in its jurisdiction. This amount compares to 83 tax treaties in Luxembourg, 74 in Ireland, and 37 in Hong Kong. Any potential investor must consider the tax treaty benefits conferred by incorporating or redomiciling in Singapore as a second-order benefit. The OECD’s Base Erosion of Profit Shifting (BEPS) initiative focuses on eradicating predatory tax rate shopping by international corporations, and Singapore is a dedicated signer of this initiative. Notwithstanding this further demonstrates the veracity of the VCC Act and Singapore’s earnest approach to confidently stepping up to the plate as the new financial doorway to Asia.

The VCC Act takes the best aspects of other tax havens’ financial frameworks and optimizes them Singapore’s unique situation. This Act comes at a near-perfect time as the city-state is poised to receive massive investment from off-shore funds seeking to redomicile as on-shore entities due to geopolitical uncertainties. Many considerations must be taken into account before a company decides to expand into a new legal jurisdiction.

However, with Singapore’s dedication to Common Law, near-perfect position in the Strait of Malacca, and increasing economic liberalization, one would be hard-pressed to find a better candidate for foreign investment.