The introduction of wealth taxes would undermine Singapore’s position as a leading asset management hub, according to financial advisers in the south-east Asian city state.
The head of Singapore’s financial regulator broached the topic of introducing potential wealth taxes to address widening inequities, but such measures could have a significant impact on its appeal to high-net-worth individuals and families.
“If Singapore does [implement such wealth taxes], then that’s going to significantly jeopardise our status as a wealth management hub because a lot of people want to come to Singapore, mainly because we don’t have capital gains tax,” Steven Seow, founder and executive director of Singapore Consultancy, told Ignites Asia.
Such taxes would not place Singapore in a “favourable” position against Hong Kong when it comes to attracting global wealth, Seow adds, noting that Hong Kong currently does not have a capital gains tax.
Desmond Teo, Singapore-based Asia-Pacific family enterprise leader and Association of Southeast Asian Nations private tax leader at EY, told Ignites Asia that unless there is a consistent adoption of a wealth tax across jurisdictions, and not just in Singapore, it would be “detrimental” to Singapore’s status as a financial centre and wealth management hub.
Ravi Menon, managing director of the Monetary Authority of Singapore, suggested that the government could impose various wealth taxes, including a property gains tax or inheritance tax, as a way to tackle wealth inequality, while speaking at the Institute of Policy Studies, a Singapore think-tank, on July 22.
Menon noted that wealth gaps have historically been driven by access to skyrocketing valuations in property investments in particular and he warned that Singapore risked growing inequality if private housing prices increased faster than those of public housing, for example.
The MAS head’s comments are the latest in a debate on wealth tax that has been ongoing in the city-state since February, when then finance minister Heng Swee Keat said there was “scope to review” the government’s approach to such policies.
Singapore’s status as a wealth hub has surged in recent years, with a number of high-profile billionaires reportedly setting up family offices in the market, including household appliance tycoon James Dyson, Chinese hotpot chain Haidilao founder Shu Ping, Google co-founder Sergey Brin and hedge fund founder Ray Dalio.
Last year, the MAS revealed that there were about 200 family offices in Singapore, with estimated total assets of around US$20 billion.
However, the Covid-related travel restrictions have somewhat cooled interest for Singapore among wealthy individuals, with many choosing to postpone their relocations to the city-state for now.