Jurisdiction - Singapore
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Singapore – Why This Country Is A Top Choice For Wealth Structuring.

17 December, 2013

 

Legal News & Analysis – Asia Pacific – Singapore – Tax

 

Woon Hum Tan, Partner & Head of Trust, Asset & Wealth Management Practice at Shook Lin & Bok LLP in Singapore, explains how Singapore is becoming an attractive and viable centre for wealth structuring – both for Asian and European investors. For clients looking to evade taxes, Singapore is not an option. But setting up an offshore structure in Singapore can still offer a number of other attractive benefits.

 

There are many legitimate reasons for European clients to want to park their money in Singapore. An obvious one is simply so they can have their Asian investments managed out of the jurisdiction, by people who can help them to deploy funds efficiently within Asian trading hours, says Woon Hum Tan, partner & head, trust, asset & wealth management practice at Shook Lin & Bok LLP in Singapore.


The twin-engined growth story of India and China – which is now expanding to include Indonesia – has meant that there are an increasing number of investment opportunities available.


In terms of the money previously held in Singapore that was not tax compliant, it’s likely to either have already left, or to be on its way out of Singapore, states Tan. “Clients have come to accept that transparency is necessary, and disclosures – to fulfil international tax requirements – are not going to go away.”


Industry practitioners have a responsibility to make sure that the money entering Singapore is clean and that any structures they set up can withstand the tests run by relevant regulators and tax authorities.


For investors looking to evade taxes, Singapore is not an option. The remaining possibilities are now limited to a small number of offshore jurisdictions and the risks associated with putting your money in lesser known banks in these places, says Tan, are far less attractive than paying your dues in a jurisdiction like Singapore.


But there is still the scope to use Singapore for legitimate tax planning. While foreign investors may be obliged to pay some form of transfer or stamp duty when they move the trust assets out of their home jurisdiction, after the Singapore trust has been set up and the trustee starts to invest and grow the assets, those assets will no longer be subject to Singapore taxes if certain conditions are met.


For locals, there’s generally less of a need for tax planning. The top income tax bracket is 20% for individuals and 17% for companies. There’s no capital gains tax and no inheritance tax – as estate duty has been abolished. But there are clients who want to set up structures for other reasons, such as for creditor protection. Many wealthy individuals are concerned about liabilities relating to their businesses. By structuring their personal assets in a trust, clients can ring-fence and protect their assets.


Many Malaysian and Indonesian families are looking for wealth protection, for privacy and security reasons. “They tend to try to keep their wealth on the low-down,” says Tan.

 

Shook Lin Bok LLP

 

For further information, please contact:

 
Tan Woon Hum, Partner, Shook Lin & Bok LLP
 

 

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