Other Wealth Planning Services
Tax planning
One of the reasons Singapore consistently ranks highly as one of the most conducive places in the world for investments and starting a business is its attractive tax regime. Singapore's corporate and personal tax rates are relatively low versus global peers, coupled with a one-tier corporate tax system and comprehensive double tax treaties.
An overview of the tax regime in Singapore
- Singapore follows a territorial basis of taxation. What this means is that companies and individuals are taxed primarily on Singapore sourced income. Foreign sourced income, such as dividends, service income, branch profits, etc. will only be taxed if it is received or deemed received in Singapore, except for income that is already subjected to taxes in a jurisdiction with headline tax rates of at least 15%.
- IRAS (Inland Revenue Authority of Singapore), the tax authority in Singapore, levies personal income tax on income earned between 1 Jan and 31 Dec each calendar year. The income tax rates for Singapore residents are between the range of 0% to 22% as of 2023. For non-residents, their income is taxed at the flat rate of 15% or the resident tax rates, whichever higher. The maximum income tax rate in Singapore is set to increase to 24% from YA 2024.
- Singapore has no capital gain tax, net wealth/net worth tax, or inheritance, estate, or gift tax.
- For corporations (both local and foreign), income tax is imposed at a flat rate of 17%. A 3-year startup tax exemption and partial tax exemption schemes are available for qualifying companies. Due to its single-tier corporate tax system, tax paid by a company on its profits is not passed on to the shareholders, which means dividends are tax-free.
- Singapore has more than 100 double tax treaties with different countries globally, enabling businesses operating in and outside of Singapore not having to pay their taxes twice.
Resident or Non-resident?
Individuals are considered residents in Singapore if they reside in the country, except for temporary absences, as may be reasonable. An individual is regarded as a Tax Resident if they work in Singapore for 183 days or more. Conversely, individuals are considered Non-resident if they work in Singapore for less than 183 days. However, under the three-year administrative concession, an expatriate who stays in Singapore for three consecutive calendar years is considered a resident, even though they may not have necessarily resided in Singapore throughout the entire period. Under the two-year administrative concession, an expatriate will be regarded as a tax resident for two years if they stay or work in Singapore for a continuous period of at least 183 days. This concession applies to foreign employees (excluding company directors, public entertainers, or professionals) who have entered Singapore from 1 Jan 2007 onwards.
Main types of taxes in Singapore
- Income Tax – Chargeable on individual and business income
- Property Tax – Chargeable to property owners based on the estimated annual value of the property
- Goods and Services Tax (GST) – Chargeable on the import of goods and most supplies of goods and services in Singapore. It is the equivalent of Value Added Tax (VAT) in other jurisdictions. The current GST rate is 8% and is set to increase to 9% in 1 Jan 2024. Exemptions apply for certain goods and services
- Stamp Duty - Chargeable for commercial and legal documents relating to immovable properties in Singapore and stocks and shares
- Motor Vehicle Taxes – Chargeable on motor vehicles such as trucks, cars, and motorcycles (e.g., road tax)
- Foreign Worker Levy – Chargeable to employers who employ foreign workers to work in Singapore
- Withholding Tax – Applicable to non-residents (individual and corporates) who derives an income from a Singaporean source for services provided or work done in Singapore
Legacy planning
What is Legacy Planning?
Legacy planning is an integral aspect of Wealth Management, where you set out how exactly you want your assets to be distributed to your loved ones and the causes you care about. A legacy plan includes not only things that are of monetary value but also intangible assets, such as values and philosophies. A person may also want to include philanthropy as part of their legacy to contribute to the causes they care about, even when they are no longer around.
Why is Legacy Planning Important?
Legacy planning is just like a blueprint for your house, except that it is a structure for your legacy. It provides peace of mind knowing that your assets will be distributed according to your wishes should you pass on. Without a legacy plan, your family members and business partners may spend a lot of time and resources to get everything in order. Conflicts may even arise among the different parties, causing disharmony, and the management of your estate may go differently than your wishes.
Create a Successful Legacy Plan
A holistic legacy plan factors in asset liquidity, liability coverage, equitable distribution, and diversification.
Asset liquidity and liability coverage
For high-net-worth individuals, it is not uncommon to have illiquid assets such as real estate, certain collectibles, art pieces, and even businesses. It is, therefore, essential to leave behind sufficient liquid assets to prevent family members from having to sell the illiquid assets for cash, which is often complicated and time-consuming. Besides cash, many high-net-worth individuals in Singapore incorporate life insurance as part of their portfolio, which generates stable returns over time through an increase in cash value. These insurance policies can also provide their loved ones with immediate cash payouts upon their demise to swiftly settle any outstanding liabilities, such as medical bills or taxes, if any.
Equitable distribution
Insurance policies can also help achieve estate equalization and fair distribution among family members. For example, a businessman may decide to bequeath his business to child A and his real estate portfolio to child B. Assuming his real estate portfolio is worth less than his business, the businessman may seek to bequeath additional assets (i.e., life insurance) to Child B to ensure both children receive an equal allocation and maintain family harmony.
Diversification
A successful legacy plan goes hand-in-hand with a well-diversified portfolio. Life insurance offers guaranteed payouts and protects your estate value from market fluctuations; however, investments are also an integral part of one's portfolio for wealth accumulation. Investments can generate returns that outpace inflation with the power of compounding, long-term growth, and risk-return trade-off. An investment portfolio typically includes stocks, bonds, exchange-traded funds (ETFs), mutual funds, real estate, options, futures, structured products, collectibles, and alternative investments such as hedge funds, private equity, or private debt. How each individual allocates their assets depends on their investment goals, age, and risk appetite.
How KGI Securities (Singapore) Can Help You in Your Legacy Planning Journey
At KGI Securities (Singapore), we offer a suite of Wealth Management investment products to our onshore and offshore clients. These include global stocks, bonds, options, futures, leveraged forex, mutual funds, structured products, and hedge funds. We also provide access to private market products with high potential returns and low correlation with traditional asset classes.
Our dedicated and experienced team of Relationship Managers, Product Advisors, and Research Analysts will work with you to construct a bespoke investment portfolio according to your financial goals and needs. Through our partners, KGI Securities (Singapore) can further assist you with your legacy planning needs, such as life insurance solutioning or establishing a trust or family office in Singapore.
Contact us today to learn more about how KGI Securities (Singapore) can help you develop a robust legacy plan that can protect your loved ones and withstand the test of time.
Family office setup
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Family offices in Singapore
Family offices have experienced a significant rise these days. Many experts have suggested that 70% of families lose their wealth in the second generation, and 90% will lose their wealth in the third generation. As such, many wealthy individuals have decided to seek professional help to manage their wealth and preserve it for future generations.
Family offices are private vehicles set up by Ultra-High-Net-Worth Individuals (UHNWI) to manage a family's financial assets. These family offices offer a comprehensive solution to managing finances and investments, including legacy planning, tax planning, charitable giving, and more, besides the typical financial planning and investment management activities.
There are two types of family offices: single-family and multi-family. As the name suggests, single-family offices render their services to one family. Multi-family offices, on the other hand, support multiple families, which, in turn, reduces clients' costs due to economies of scale and cost-sharing.
Singapore as a preferred wealth management hub and family office location
Singapore has become a leading hub for family offices and wealth management services in recent years, with a proactive government introducing initiatives to promote development in this space, including various tax incentive schemes to encourage more family offices to set up in Singapore (KPMG, 2022: https://home.kpmg/us/en/home/insights/2022/05/tnf-singapore-changes-to-family-office-tax-incentive-regimes.html).
According to EDB Singapore, around 700 family offices were set up in Singapore as of 2021, compared to 400 in 2021 (The Business Times, 2022), increasing by a whopping 75% in just one year! So why is Singapore the preferred destination for wealthy individuals and businesses alike?
1. Safety and security
It is no secret that Singapore is ranked as one of the safest countries globally. According to a recent study, Singapore has low crime and traffic accident rates and little or no natural disaster risk (The Swiftest, 2022). Singapore is a reputable and well-regulated jurisdiction for financial services with a stable and sound financial system (MAS, 2015). This gives families peace of mind when setting up their family office in Singapore and choosing Singapore as their preferred wealth management hub.
2. Stability
Singapore has maintained independence as a sovereign state since 1965 while building and maintaining strong alliances with many other countries. Singapore's political stability, low corruption rates, sound monetary and fiscal policies, and robust legal system are the key reasons behind the country's stability and a strong economy.
3. Competitive tax regimes
Besides the tax incentives schemes mentioned earlier, Singapore's tax regimes are extremely friendly, with no tax on capital gains and no dividend tax in general, a competitive corporate tax of 17%, and comprehensive double taxation agreements in place with various countries.
4. Access to opportunities
Because of the reasons above, Singapore attracts many foreign investors and a strong deal flow of investment opportunities both regionally and globally. These are further supported by top-notch wealth management platforms and a highly experienced talent pool of wealth management professionals, making Singapore an ideal location to set up a family office and gain access to exciting opportunities, professional expertise, and resources.
Areas of consideration when setting up a family office
1. What are the objectives to be achieved through the family office?
- Typically, the family office’s activities include implementing an investment strategy for the entire family, portfolio management, tax filing, fulfilling reporting obligations, and so on. Setting the objectives for the family office would help ensure that the optimal structure is established, and the right professionals are recruited to help set up the family office, such as lawyers and tax advisers.
2. What are the assets that will be managed by the family office?
- There are many different types of assets that can be managed by a family office. These include bankable assets such as cash and financial investments, insurance policies, and non-bankable assets such as real estate, valuable items (e.g., jewellery, private jets), collectibles (e.g., rare artworks), and even companies! Deciding which assets to be transferred to the family office is critical, primarily if the assets are located offshore. This is because different parties will have to come together to identify the most effective way to transfer the assets while considering the tax and legal implications of the jurisdiction in which the assets are located.
3. What is the family office’s investment strategy and mandate?
- If a family office intends to submit an application through the Monetary Authority of Singapore (MAS) and the Economic Development Board (EDB), the regulatory authorities would require the family office to provide a clear roadmap of the investment strategy and business mandate as part of their evaluation process. Investment objectives and risk tolerance would be a good starting point for deciding the investment strategy and business mandate to implement for the family office.
Other areas for consideration include licensing matters, ongoing operational requirements, and legacy planning and philanthropy arrangements, all of which are relatively complex and should be discussed with a professional.
Interested in setting up a family office in Singapore?
At KGI Securities (Singapore), we offer our clients (onshore and offshore) a suite of Wealth Management investment products and services. These include global stocks, bonds, options, futures, leveraged forex, mutual funds, structured products, and hedge funds. We also provide access to private market products with high potential returns and low correlation with traditional asset classes. Through our alliances, KGI Securities (Singapore) can further assist you with your wealth planning needs, such as life insurance solutioning, establishing a trust or family office in Singapore, or even immigration. Contact us today for a no-obligation discussion.
Trust setup
Setting up a trust in Singapore
What is a trust?
A trust is a legal arrangement or fiduciary relationship in which one party (the settlor or trustor) transfers property or assets to another party (the trustee), who then holds the property or assets for the benefit of a third party (beneficiaries).
A trustee is legally obligated to act in the beneficiaries' best interests. However, a settlor may assign a "protector" to protect the trust and prevent the trustee from abusing their powers.
For a long time, many high-net-worth individuals have used trusts to hold and pass on family wealth. In recent years, trust structures have become more popular even among the mass affluent due to the unique benefits they offer.
Why set up a trust?
A trust can be used for many purposes, as it allows individuals to determine how they want their assets to be managed and distributed while alive and after death. Depending on the trust structure, it can also be used for tax planning purposes and help protect assets from creditors.
Many HNW families use trusts as a wealth management tool. A settlor can specify how and which assets within the trust should be invested. The trustee will oversee the assets and split them amongst the beneficiaries according to the trust terms, including investment gains.
Trusts are also a common tool for legacy planning purposes. With a trust, lengthy probate procedures can be avoided. One can set out the trust rules specifying how the assets should be passed on to the beneficiaries, such as their children, grandchildren, and great-grandchildren, even if they do not exist yet! Suppose any of the beneficiaries are still minors. In that case, the trust is able to keep hold of the assets until the children are older before distributing them as per the settlor's wishes.
What types of assets can be put in a trust?
Generally, any assets that can be ascertained and legally owned can be included in a trust. This includes cash, stocks, valuables, property, collectibles, family businesses, insurance policies, and so on.
What types of trusts are available in Singapore?
There are different types of trust structures, each with its own features, terms, and benefits. Whether to set up a trust and which type depends on an individual's goals and circumstances. However, it is useful to understand the four main categories of a trust: living, testamentary, revocable, and irrevocable. However, keep in mind that there are additional subcategories of trusts with varying terms and potential benefits.
- Living Trust - Also known as an inter vivos trust, a living trust is established when the settlor is still alive. A common reason for setting up a living trust is to efficiently transfer assets to beneficiaries. A living trust achieves this by avoiding probate, which is the court proceedings for asset distribution after death. Bypassing probate can save time and legal fees and potentially reduce estate taxes for beneficiaries if any.
- Testamentary Trust: Such trusts are set up after death according to the settlor's last will and testament. Since the terms of a testamentary trust are established based on a will, they can be amended at any time up until the settlor's death. As such, this type of trust can be more straightforward and flexible than a living trust.
- Revocable Trust: A revocable trust is a type of living trust because it is created while the settlor is alive. Its name points to the fact that the terms of the trust can be altered during the settlor's lifetime.
- Irrevocable Trust: Unlike the revocable trust, the terms of an irrevocable trust cannot be changed after the trust is created. The primary reason to create an irrevocable trust is for the settlor to transfer assets out of their taxable estate. After that, income from these assets is no longer taxable to the settlor during their lifetime and likewise not taxable to the estate upon the settlor's demise.
Setting up a trust in Singapore
As a leading global financial hub, Singapore is rapidly gaining prominence as a trusted wealth management jurisdiction internationally and a prime destination for setting up trusts and family offices. Here are some of the reasons behind this trend:
- Political stability
- Attractive tax regime and strong regulatory framework
- Market-friendly and stable economic policies
- Robust and efficient judicial system
In Singapore, trusts are governed by the Trustees Act (Cap 337), and many of the principles are based on English trust law. Over the years, the Trustees Act has been amended to facilitate the use of trusts for wealth management purposes in Singapore. Some of the key benefits that Singapore's trust framework offers include the following:
- No formal registration of Singapore trusts required
- Strict confidentiality and banking secrecy laws
- Protects settlor's assets from forced heirship laws
- Settlors are allowed to serve any or all the powers of investment or asset management functions and retain an active role in managing the investments of the trust
- Ability to appoint another party (i.e., a protector) to supervise the conduct of the trustees
- No capital gains tax
- No estate duty or inheritance tax
- Income tax exemption for foreign trusts
Interested in setting up a trust in Singapore?
At KGI Securities (Singapore), we offer our clients (onshore and offshore) a suite of Wealth Management investment products and services. These include global stocks, bonds, options, futures, leveraged forex, mutual funds, structured products, and hedge funds. We also provide access to private market products with high potential returns and low correlation with traditional asset classes. Through our alliances, KGI Securities (Singapore) can further assist you with your wealth planning needs, such as life insurance solutioning, establishing a trust or family office in Singapore, or even immigration. Contact us today for a no-obligation discussion.
Immigration advice
Immigration to Singapore – What are the available options?
Singapore is consistently one of the top destinations people consider when they are looking to migrate. This shouldn’t come as a surprise, as Singapore is always considered a safe country with political stability, low crime rates, low corruption, a strong economy, world-class education systems, a business-friendly environment, and the list goes on and on. Being nicknamed “The Green City”, Singapore is known for being a clean city which offers a high quality of life. Most importantly, Singapore has friendly programs and schemes to welcome foreigners to migrate to Singapore and live comfortably in the city. Individuals or families who wish to apply to be a Singapore Permanent Resident (PR) may do so under the following schemes: Global Investor Program (GIP), the Professional, Technical Personnel and Skilled Workers (PTS) scheme, Sponsorship scheme, or Student scheme (FSS).
Global Investor Program
An investor who is interested in starting a business or make investments in Singapore may apply for Singapore PR status for themselves and their immediate family members through this program. There are several options available for investors, provided if they meet the qualifying criteria:
- Option A – Invest at least S$2.5 million in a new business entity or expansion of an existing business operation.
- Option B – Invest at least S$2.5 million in a GIP fund that invests in Singapore-based companies
- Option C – Invest S$2.5 million in a new or existing Singapore-based single family office having Assets-Under-Management (AUM) of at least S$200 million
The exact qualifying criteria and terms and conditions can be found below.
English version: https://www.edb.gov.sg/content/dam/edb-en/how-we-help/global-investor-programme/GIP%20Factsheet%20(English).pdf
Chinese version: https://www.edb.gov.sg/cn/how-we-help/global-investor-programme.html
The GIP is the fastest route to obtaining Singapore PR status, which will pave the way for future citizenship status. However, not everyone may meet the comprehensive requirements.
PTS scheme
This scheme is the most common and easiest route to becoming a PR in Singapore. To qualify, you will need to be employed in Singapore for at least 6 months, and are holding on to the following passes issued by the Immigrations and Checkpoint Authority of Singapore (ICA):
- Employment Pass or;
- Entrepreneur Pass or;
- Personalized Employment Pass or;
- S Pass
It is important to note that even though you may meet the eligibility requirements, the approval of the application depends on many factors, which include:
- Your duration of stay in Singapore
- Your current and prior employment
- Your current employer’s reputation and credentials
- Your educational background and qualifications
- Your current salary and financial status
- Your social contribution (e.g., charity or volunteer work)
- And more…
Sponsorship scheme
If an individual is a spouse or a child (unmarried and under 21) of a Singapore Citizen (SC) or PR, or an aged parent of a SC, he or she may apply for Singapore PR status via the Sponsorship scheme. Both the sponsor and applicant will be assessed holistically for the application, and factors include family profile, achievements, economic contributions, and more.
Student scheme
A foreign student studying in Singapore may apply for PR status if they meet the following eligibility criteria:
- Resided in Singapore for more than 2 years at the point of application,
- Have passed at least one national exam (i.e., PSLE or GCE ‘N’/’O’/’A’ levels) OR;
- Are in the Integrated Program (IP)*
*The IP is a 6-year course leading to the GCE A-Level examination or International Baccalaureate Diploma or NUS High School Diploma. Students in the Integrated Program do not need to take the GCE O-Level examination in Secondary 4.
While foreign students apply for PR on their own merits, all applicants under this scheme are required to provide certain documents of their parents. This enables the ICA officers to gain a better understanding of the applicant’s family profile to determine their suitability as PR.
Are you interested in migrating to Singapore?
If you are considering migrating to another country, Singapore is an ideal location for you and your family to settle down. At KGI Securities (Singapore), we offer our clients (onshore and offshore) a suite of Wealth Management investment products and services. These include global stocks, bonds, options, futures, leveraged forex, mutual funds, structured products, hedge funds, and private market products. Through our alliances, we help our clients in other areas that matter to them, such as immigration planning and setting up a trust or family office in Singapore. Contact us today for a no-obligation discussion.
1. Margin financing
Our margin facility allows clients to access up to 3.5 times their capital to finance the purchase of securities by pledging cash and/or marginable securities as collateral. Marginable products include selected shares quoted on SGX, HKSE, NYSE, NASDAQ, and SET, bonds, and mutual funds.
2. Securities borrowing and lending (SBL)
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Securities borrowing and lending (SBL) involves a temporary loan of securities between the borrower and lender. The borrower borrows the shares for shorting purposes while maintaining a required level of collateral and paying any incurred fees back to the lender. Additionally, lenders will receive a lending fee. We provide an on-demand SBL facility for clients to hedge their investment portfolios.
3. Custodial services
We provide custodial services for various products. Clients can transfer their existing holdings with another brokerage or bank (within or outside of Singapore) to us for custody.
KGI Securities (Singapore) Pte. Ltd. which is a holder of a Capital Markets Services Licence regulated by the Monetary Authority of Singapore (MAS) has expanded its regulated activities to include Leverage Foreign Exchange Trading. It is a member of SGX-ST Securities Trading, SGX-DT Derivatives Trading, SGX-DC Derivatives Clearing and CDP Securities Clearing. It is also a Member of ICE Futures Singapore and ICE Clear Singapore.
