Singapore tax breaks for fund managers sharpen HK rivalry

Singapore announced plans to exempt certain performance-related income for fund managers and investment professionals, escalating tax competition with Hong Kong and causing some hedge fund employees to pause or reassess relocation plans.

The proposals were discussed at a private gathering of financial leaders held at the Sofitel’s Wallich Ballroom and organised by the Monetary Authority of Singapore’s Singapore Financial Leaders Network. Chee Hong Tat, deputy chairman of the MAS, outlined the city-state’s effort to strengthen its asset management sector. Officials expect to publish fuller details in the government’s next annual budget, due in February.

Hedge funds and their advisers have shown strong interest and begun modelling the potential impact on pay and firm structures. Some employees who were preparing moves to Hong Kong have delayed arrangements. Portfolio managers with families cited international school application deadlines for the 2027 academic year, which can close as early as November, as a factor in timing decisions.

A key open question is how Singapore will define eligible income and which roles can claim the exemption. The issue matters for multi-strategy funds that organise investment teams into separate “pods,” where individual portfolio managers run discrete strategies inside a larger fund. Firms using pod structures include Millennium Management and Balyasny Asset Management. Managers are seeking clarity on whether the exemption will apply at the pod level or only at the overall fund level.

Hong Kong recently proposed changes to the tax treatment of carried interest that were interpreted as potentially benefiting individual portfolio managers. Those initial proposals were later narrowed, with some groups such as proprietary trading firms excluded. Singapore’s final rules could be broader or narrower depending on how they are drafted, and the scope of the exemption will influence which professionals change tax residence or move.

Singapore is also adjusting immigration criteria for the Overseas Networks & Expertise Pass. The pass had required a monthly base salary of at least SGD30,000, a threshold that can be hard for senior investment professionals because pay is often concentrated in bonuses and performance fees. Allowing other forms of income to count toward eligibility could make the pass more accessible to the fund industry.

Tax advisers expect the announced changes could prompt managers to restructure compensation arrangements or reconsider the use of offshore entities that have been used to manage tax liabilities and treat performance pay as capital gains. How firms act will depend on the final legislative text and any limits on which specialists, such as analysts or other support staff, are eligible.

Both Singapore and Hong Kong host asset management industries valued at more than $5 trillion. Until Singapore publishes the full details in the budget, fund groups and advisers will continue to evaluate the proposals and prepare contingency plans based on likely interpretations of the rules.