Eltoma Corporate Services — Authorised Corporate Services Provider
Articles are provided for general informational purposes by an authorised corporate services provider and do not constitute legal advice.
Singapore and Hong Kong are strengthening their family-office ecosystems through reforms that pursue a similar commercial objective but operate through very different legal mechanisms. Singapore has introduced a dedicated licensing exemption for genuine single-family offices. Hong Kong is seeking to expand and modernise the tax concessions available to funds, family-owned investment holding vehicles and carried-interest arrangements. For internationally mobile families and their advisers, the distinction is fundamental.
For many years, Singapore and Hong Kong have competed for the same broad constituency: founders who have generated substantial business wealth, internationally mobile families, private investors, investment managers and the professional advisers who serve them. The traditional comparison often focused on tax rates, political stability, access to capital markets and the perceived ease of establishing a company. That analysis is now incomplete. The more important question is how each jurisdiction expects a family office to be legally constituted, supervised, taxed and operated.
The 2026 developments illustrate this shift. Singapore’s reform is principally regulatory. It determines when a company managing the wealth of one family may remain outside the capital-markets-services licensing regime and what visibility the Monetary Authority of Singapore (MAS) will retain over that company. Hong Kong’s reform is principally fiscal. It seeks to broaden the vehicles, investments and remuneration arrangements capable of benefiting from preferential treatment under the Inland Revenue Ordinance, while adding reporting and economic-substance requirements.
The regimes are therefore not substitutes in any simple sense. A Singapore analysis begins with the identity of the family and the perimeter of the fund-management exemption. A Hong Kong analysis begins with the legal character of the investment vehicle, the nature of its transactions and the conditions for the profits-tax concession. The distinction affects constitutional documents, ownership maps, employee participation, portfolio design, banking arrangements and the evidence that must be maintained throughout the life of the structure.
Before 15 June 2026, a Singapore SFO commonly relied on the exemption for a corporation managing assets for related corporations under the Second Schedule to the Securities and Futures (Licensing and Conduct of Business) Regulations. Where the structure did not fit within that corporate-group exemption, an individual exemption could be sought under the Securities and Futures Act 2001. The position was workable, but the legal analysis often required family wealth arrangements to be translated into corporate-group concepts that had not been designed specifically for private family structures.
The Securities and Futures (Licensing and Conduct of Business) (Amendment) Regulations 2026, S 373/2026, introduced a dedicated class-exemption route for qualifying SFOs. This does not convert the SFO sector into a fully licensed industry. Rather, it makes the boundary of the exemption more explicit. A company satisfying the prescribed requirements may carry on fund management for the permitted family persons and entities without obtaining a capital markets services licence. A company that falls outside those requirements must identify another valid exemption, modify its activities or consider licensing.
The central question is whether the wealth being managed genuinely belongs within one family. Where more than one founding family member is involved, the rules use a common-ancestor test: the relevant ancestor must not be more than five generations removed from the youngest generation that established the SFO in Singapore. The detailed framework also recognises specified relationships such as spouses, certain former spouses, adopted children and stepchildren. This provides flexibility for modern family arrangements, but it requires a defensible family map rather than a broad commercial description of who is treated as “family”.
The regime is intended to accommodate different wealth-holding forms. Companies, trusts, foundations and similar arrangements may sit within the structure where the underlying wealth and beneficiaries remain within the permitted family perimeter. That structure-neutral approach is commercially useful, particularly for succession planning. It also means that advisers must trace ownership and economic benefit through each layer. The legal form of a trust or foundation will not, by itself, establish that all managed assets are family assets for the purposes of the exemption.
Limited participation by key employees may be accommodated, reflecting the reality that professional investment staff are sometimes offered co-investment or incentive rights. Such arrangements nevertheless require particular care. Voting rights, economic entitlements, carried interests, employee investment vehicles and side letters should be reviewed together. An arrangement that gives non-family participants material control or introduces substantial third-party capital may change the character of the office and call the exemption into question.
The reform does more than create a new route. It also restricts the older exemption for corporations managing assets for related corporations. Under the amended framework, that route is limited where more than 50 per cent in value of the relevant managed corporation’s assets originates from members of one family. The policy logic is clear: a structure that is substantively a family office should normally be assessed under the SFO-specific framework rather than continuing indefinitely under a generic group-company exemption.
Existing Singapore offices should therefore identify the precise legal basis on which they have operated, rather than assuming that historic practice remains sufficient. The review should cover the source of the assets, the relationships between the manager and the managed entities, changes in ownership, the admission of new family branches and any employee or external co-investment. The transition period for existing SFOs runs until 15 June 2027, but the documentary exercise may be substantial where structures have developed incrementally over several years.
MAS has paired the class exemption with a streamlined supervisory framework. A qualifying SFO must notify MAS of its operations, maintain an account with a MAS-licensed bank and submit an annual return containing prescribed core information, including its total assets under management and its banking relationship. MAS guidance indicates that the first annual return is generally due within four months after the end of the SFO’s financial year. The framework therefore removes the need for full licensing while ensuring that the sector is identifiable and connected to Singapore’s regulated banking system.
For families, this represents a trade-off rather than a burden-free exemption. The legal perimeter is clearer, but the office must be able to evidence continuous compliance. Family and ownership records, asset-origin schedules, investment mandates, bank documentation and employee participation arrangements should be maintained as part of the governance file, not reconstructed only when a bank or regulator asks questions.
Hong Kong’s legal architecture is different. The territory already has a unified profits-tax exemption for qualifying funds, a concession for eligible carried interest and, since 2023, a concession for eligible family-owned investment holding vehicles (FIHVs) and family-owned special purpose entities (FSPEs). The 2026 bill is therefore an enhancement exercise. It seeks to make an established regime more flexible for the way private capital is now invested and managed.
Under the current FIHV regime, an eligible vehicle may obtain a 0 per cent profits-tax rate on assessable profits arising from qualifying transactions and permitted incidental transactions, provided the statutory conditions are satisfied. The FIHV may be established in or outside Hong Kong, but it must be related to a single family, normally managed or controlled in Hong Kong and managed by an eligible SFO. Family members must ordinarily hold at least 95 per cent of the beneficial interest, subject to specific rules for charitable entities and limited unrelated interests.
The eligible SFO must be a private company normally managed or controlled in Hong Kong, satisfy the family-ownership condition and provide services to specified family persons or entities. The aggregate net asset value of the relevant specified assets managed for the family must ordinarily be at least HK$240 million. The FIHV must also conduct its core income-generating activities in Hong Kong. At a minimum, the current substantial-activities requirement calls for two qualified full-time employees and HK$2 million of Hong Kong operating expenditure, whether incurred by the FIHV or, where permitted, by the eligible SFO on its behalf.
The Inland Revenue (Amendment) (Preferential Tax Regimes for Funds, Family-owned Investment Holding Vehicles and Carried Interest) Bill 2026 was gazetted on 12 June 2026. According to the Government’s official announcement, it proposes to expand the definition of a fund and the scope of qualifying investments, remove the existing 5 per cent threshold for incidental transactions, relax aspects of the exemption for SPEs and FSPEs, and enhance the carried-interest regime. It would also introduce a tax-reporting mechanism and economic-substance requirements under the unified fund regime similar to those already applicable to FIHVs.
The practical significance lies particularly in the proposed treatment of modern asset classes. The Government has expressly connected the reform with private credit, digital assets, precious metals and commodities. These are not peripheral categories for many private investors. Direct lending, structured credit, tokenised assets, bullion and commodity-linked strategies increasingly form part of diversified family portfolios. A wider statutory investment perimeter may therefore influence where investment vehicles, decision-makers and specialist teams are located.
The carried-interest proposals also matter beyond conventional private-equity funds. Hong Kong’s existing regime can apply a 0 per cent profits-tax rate to eligible carried interest received by a qualifying person, while qualifying employees may obtain a corresponding salaries-tax exclusion, subject to the detailed statutory and certification conditions. Enhancements to this regime may affect how investment professionals are remunerated and whether incentive pools are located in Hong Kong. The final legislation will need to be analysed carefully before any existing arrangement is altered in reliance on the proposed changes.
The policy direction is not simple liberalisation. Hong Kong is widening the possible tax base of the preferential regime while also formalising reporting, records and substance. A family may have a genuine Hong Kong office and still fail to obtain the expected concession for a particular profit stream if the asset is outside the statutory list, the transaction is not qualifying, an anti-avoidance rule applies or the local activities are insufficient. Portfolio classification and transaction documentation are therefore central to the tax result.
There is also an important timing point. As at 21 June 2026, the bill had been gazetted but not enacted. Advisers should distinguish between planning under the current Inland Revenue Ordinance and modelling the potential effect of the bill. Transaction documents should not state that proposed asset classes or amended concessions are already available unless and until the legislation has been passed and its commencement provisions have taken effect.
Singapore is principally an entity-definition and regulatory-perimeter exercise. The adviser must establish who belongs to the family, where the managed wealth originated, which trusts and entities are permitted, how non-family employees participate and whether the office remains an SFO rather than a third-party manager. The constitutional and ownership documents are therefore part of the legal evidence supporting the exemption.
Hong Kong is principally a tax-characterisation and substance exercise. The adviser must map each vehicle, asset and transaction against the Inland Revenue Ordinance, identify which profits arise from qualifying or incidental transactions, test the use of special purpose entities and ensure that the Hong Kong management function is real. The family-office company and the investment-holding vehicles may therefore require separate analyses even though they form part of one commercial structure.
Neither approach is inherently superior. Singapore may be attractive where the priority is a clearly codified licensing position, a strong institutional environment and close integration with regulated banks. Hong Kong may be attractive where the family seeks a broad and adaptable tax platform for funds, private investments, private credit and incentive arrangements. A sophisticated family may also use both jurisdictions for different functions, provided that the allocation of management, ownership and decision-making is commercially genuine and the cross-border tax consequences are addressed.
For families connected with Russia, Ukraine, Mainland China or other third countries, formal eligibility under the SFO or FIHV rules is only one component of the implementation exercise. Banks, custodians and professional service providers will examine the entire source-of-wealth narrative, the history of the principal businesses, tax compliance, beneficial ownership, political exposure, litigation and sanctions risk. These assessments must remain fact-specific. Nationality alone neither establishes nor eliminates legal or compliance risk; ownership, control, counterparties and the movement of funds are ordinarily more important.
Banking should be treated as an integral workstream rather than a final administrative step. The family should be ready to provide historic financial statements, sale and dividend documentation, tax returns, inheritance or trust records, ownership charts and explanations of significant transfers. A technically valid family-office structure may be commercially ineffective if it cannot obtain appropriate custody, brokerage and payment facilities.
The family-office analysis must also be coordinated with corporate and personal tax residence, controlled foreign company rules, permanent establishments, transfer pricing, treaty access, succession and inheritance, foreign-sourced income rules and the Common Reporting Standard. Immigration and work-authorisation planning will influence where directors and investment professionals can genuinely perform their functions. A structure that is incorporated in one jurisdiction but habitually managed from another may create a tax-residence result inconsistent with the intended design.
The 2026 reforms demonstrate convergence in ambition but divergence in legal technique. Singapore has converted a comparatively informal SFO accommodation into a dedicated and monitorable licensing exemption with defined family, ownership and reporting boundaries. Hong Kong is using tax legislation to widen the assets, vehicles and incentive arrangements capable of benefiting from preferential treatment, while strengthening reporting and economic substance.
The appropriate jurisdiction cannot be selected by comparing headline tax rates or incorporation costs. It depends on whose wealth will be managed, how the family is connected, which assets will be held, where decisions will be taken, how professional staff will participate and whether the family can maintain credible banking and operational substance. The family office should therefore be designed as an integrated legal, tax, regulatory and operational platform, rather than as an isolated company-formation exercise.
Singapore introduced a dedicated class exemption allowing a qualifying company to manage the assets of one family without obtaining a capital markets services licence, provided the statutory family, asset and operating conditions are continuously satisfied.
No. A genuine SFO may rely on the dedicated exemption if it remains within the prescribed perimeter. An office that manages third-party wealth or falls outside the exemption must identify another exemption, restructure its activities or consider licensing.
A qualifying SFO must notify MAS, maintain an account with a MAS-licensed bank and submit an annual return with prescribed information. MAS guidance states that the first annual return is generally due within four months after the end of the SFO’s financial year.
An eligible family-owned investment holding vehicle may obtain a 0% profits-tax rate on qualifying transactions and permitted incidental transactions if the family-ownership, management, asset-threshold and substantial-activities conditions are met.
The Bill proposes to expand the definition of a fund and qualifying investments, remove the 5% incidental-transaction threshold, relax treatment for SPEs and family-owned SPEs, enhance the carried-interest regime and introduce reporting and economic-substance requirements under the unified fund regime.
No. As at 21 June 2026, the Bill had been gazetted and was scheduled for first reading on 24 June 2026, but it had not yet been enacted. Any planning based on the proposed changes should remain conditional.
There is no universal answer. Singapore focuses on a clear licensing exemption and regulatory interface; Hong Kong focuses on tax treatment of vehicles, assets and profit streams. The best choice depends on family composition, asset classes, management location, banking, staffing and cross-border tax consequences.
Potentially, yes. Different functions may be allocated between the jurisdictions, but the structure must have genuine commercial logic, clearly allocated management and decision-making, appropriate transfer pricing and consistent banking, tax and regulatory documentation.
Formal eligibility is only one part of the analysis. Banks and service providers will also review source of wealth, beneficial ownership, sanctions and political exposure, tax compliance, litigation history, movement of funds and the practical location of management and control.
Articles are provided for general informational purposes by an authorised corporate services provider and do not constitute legal advice.
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