Compare Hong Kong's SFO/FIHV Tax Regime with the Corresponding Scheme in Singapore
- Roger Pay
- Dec 8, 2025
- 9 min read
Hong Kong vs. Singapore: Comparing the Family Office Tax Regimes (SFO/FIHV vs. 13O/13U)
Compare Hong Kong's SFO/FIHV Tax Regime with the Corresponding Scheme in Singapore
The competition between Hong Kong (HK) and Singapore (SG) to become Asia's premier wealth management hub is intensifying, particularly in attracting Single Family Offices (SFOs). Both jurisdictions offer highly attractive tax incentive schemes that grant a near-zero tax rate on investment income, but their mechanisms, requirements, and key differentiators present a nuanced choice for Ultra-High-Net-Worth (UHNW) families.
This article provides a detailed comparison of Hong Kong's newly implemented Family-owned Investment Holding Vehicle (FIHV) Tax Concession Regime with Singapore's established Section 13O (S13O) and Section 13U (S13U) Fund Tax Exemption Schemes.
At a Glance: HK FIHV vs. SG 13O/13U Schemes
Feature | Hong Kong (HK) - FIHV Tax Concession (0% Profits Tax) | Singapore (SG) - S13O & S13U Fund Tax Exemption (0% Tax) |
Legislation | Inland Revenue Ordinance (Amendment) (Tax Concessions for Family-owned Investment Holding Vehicles) Bill 2022 | Income Tax Act, Sections 13O (Resident Fund Scheme) & 13U (Enhanced-Tier Fund Scheme) |
Tax Rate | 0% Profits Tax on qualifying transactions and incidental income. | 0% Tax Exemption on specified investment income. |
AUM Requirement | Minimum HK$240 million (approx. US$30.8M) aggregate Net Asset Value (NAV). | S13O: Minimum S$20 million at application. S13U: Minimum S$50 million at application. |
Application Process | Self-Declaration/Election in the annual tax filing. No formal pre-approval from the tax authority is required (Irrevocable election). | Formal Application and Approval required from the Monetary Authority of Singapore (MAS). |
Local Substance (Key Requirements) | Employees: Minimum 2 full-time, qualified employees in HK. Expenditure: Minimum HK$2 million annual operating expenditure in HK. | S13O: Minimum 2 Investment Professionals (IPs) (at least 1 non-family member). S13U: Minimum 3 IPs (at least 1 non-family member). Tiered local Business Spending (e.g., S$200k - S$1M+). |
Local Investment | None explicitly required. | Capital Deployment Requirement (CDR): Must invest the lower of 10% of AUM or S$10 million in local investments (e.g., Singapore-listed equities/debt) per year. |
Vehicle Domicile | FIHV can be incorporated locally or offshore but must be normally managed or controlled in Hong Kong. | S13O: Must be a Singapore tax resident (typically a Singapore-incorporated company or VCC). S13U: Can be onshore or offshore. |
Non-Tax Incentives | New Capital Investment Entrant Scheme (CIES) can be combined for residency. |
🇭🇰 Hong Kong's SFO/FIHV Tax Concession Regime
Hong Kong's regime, effective from May 2023 (with retrospective effect to April 1, 2022), is a direct response to Singapore's success and aims to provide tax certainty for Single Family Offices (SFOs) utilizing Family-owned Investment Holding Vehicles (FIHVs).
Key Advantages of the HK Regime:
Zero Tax on Investment Profits: Profits derived from "qualifying transactions" (a broad list of specified assets, including securities, futures, foreign exchange, and private investments) and "incidental transactions" (subject to a 5% threshold) are exempt from Profits Tax at a 0% rate.
Simplified Application: The absence of a mandatory pre-approval or application process with the Inland Revenue Department (IRD) is a major draw, providing a quicker and more administrative-light path to benefit from the concession. An irrevocable election in the annual tax return is sufficient.
No Local Investment Mandate: Unlike Singapore, Hong Kong does not impose a mandatory local capital deployment requirement, offering greater global investment flexibility.
Substance Requirements in HK:
The regime requires the FIHV to demonstrate sufficient economic substance in Hong Kong:
The FIHV must be managed by an eligible SFO in Hong Kong.
Minimum two full-time employees in Hong Kong who are qualified to carry out investment activities.
Minimum HK$2 million (approx. US$260,000) annual operating expenditure incurred in Hong Kong.
🇸🇬 Singapore's 13O and 13U Fund Tax Exemption Schemes
Singapore's schemes, primarily the S13O (onshore, resident fund) and S13U (enhanced tier, onshore/offshore fund), are well-established mechanisms under the Income Tax Act. They offer a tax exemption on specified investment income, effectively making the effective tax rate 0% for the fund.
Key Advantages of the SG Regime:
MAS Endorsement and Clarity: The Monetary Authority of Singapore (MAS) manages the schemes, providing a clear, regulated, and officially approved framework, which many families view as a mark of stability and certainty.
Residency Pathway: The schemes are often combined with the Global Investor Programme (GIP), which offers a clear pathway to Singapore Permanent Residency for eligible family principals.
Flexibility in Entity Type: The schemes can be used with various fund structures, including the popular Singapore Variable Capital Company (VCC).
Substance and Commitment Requirements in SG:
Singapore's schemes generally mandate a higher level of commitment and substance:
Higher AUM and Staffing: S13U requires a minimum S$50M AUM and at least three Investment Professionals (IPs), which is a higher bar than Hong Kong's minimum.
Local Business Spend: A tiered system of annual local business expenditure (starting at S$200k) ensures a quantifiable economic impact on the local economy.
Local Investment Mandate (CDR): The requirement to invest the lower of 10% of AUM or S$10 million in Singapore-listed assets or qualifying local debt/private investments signifies a commitment to the Singapore financial market.
Which Jurisdiction is Right for Your Family Office?
The decision between Hong Kong and Singapore will depend on the family's priorities:
For Maximum Global Investment Flexibility: Hong Kong may be preferred due to its lack of a local investment mandate (CDR), allowing the FIHV to deploy 100% of its capital globally.
For a Clear Residency Pathway and MAS Approval: Singapore offers a more integrated and established solution, where tax exemption approval (S13O/S13U) can be streamlined with a Permanent Residency (PR) application via the GIP.
For Administrative Ease: Hong Kong's self-declaration/election mechanism provides a simpler, non-MAS-approved path, potentially offering a quicker start and less ongoing regulatory interface.
For Lower AUM: Singapore's S13O scheme (S$20M minimum) is more accessible for family offices with a lower AUM than Hong Kong's HK$240M.
For a China-Focused Strategy: Hong Kong remains the primary gateway to Mainland China, offering unparalleled proximity and connectivity for investments into the Greater Bay Area and beyond.
Both cities offer robust legal systems, stable political environments, and the absence of estate, inheritance, or capital gains tax, making either one an excellent base for multi-generational wealth management in Asia.
Common "Qualifying Transactions" under the Hong Kong FIHV Regime and Types of "Designated Investments" under the Singapore 13O/13U Schemes
That gets into the technical heart of both regimes. The assets eligible for tax exemption are clearly defined in the respective laws.
Here is a list of the common "Qualifying Transactions" in Hong Kong and the "Designated Investments" in Singapore for their respective Family Office/Fund Tax Schemes.
🇭🇰 Hong Kong FIHV Regime: Qualifying Transactions (Schedule 16C Assets)
Profits derived from "Qualifying Transactions" in the following Specified Assets (Schedule 16C Assets) are eligible for the 0% Profits Tax concession for a Family-owned Investment Holding Vehicle (FIHV).
Core Financial Assets:
Securities (e.g., shares, stocks, bonds, debentures, loan stocks, notes).
Shares, Stocks, Debentures, Loan Stocks, Funds, Bonds, or Notes of, or issued by, a private company (subject to anti-avoidance rules, particularly concerning property-rich companies and holding periods).
Futures contracts.
Foreign exchange contracts.
Deposits (other than those made by way of a money lending business, but including deposits made with a bank and certificates of deposit).
Exchange Traded Commodities (ETCs).
Foreign Currencies.
Over-the-Counter (OTC) Derivative Products relating to the above assets.
Rights, Options, or Interest in the above specified assets.
Additional/Modern Assets (as legislated or under proposal):
Immovable Property situated outside Hong Kong.
Interest in non-corporate private entities (e.g., partnerships).
Emission Derivatives/Allowances and Carbon Credits.
Insurance-linked Securities (ILS).
Loan and Private Credit Investments (Note: Traditional interest income on loans was often treated as an 'incidental transaction' subject to a 5% threshold, but recent proposals aim to simplify this, bringing private credit/loans fully under the scope).
🇸🇬 Singapore 13O/13U Schemes: Designated Investments
Income (including gains) derived from "Designated Investments" under the Section 13O (Onshore) and Section 13U (Enhanced-Tier) schemes is exempt from Singapore income tax. The scope is generally broad, covering most liquid financial market assets.
Core Financial Assets:
Stocks and Shares of any company (excluding certain unlisted, property-rich Singapore companies).
Bonds, Notes, Commercial Papers, Treasury Bills, and Certificates of Deposit (including Qualifying Debt Securities).
Real Estate Investment Trusts (REITs), Exchange Traded Funds (ETFs), or Business Trusts listed on a MAS-approved exchange.
Securities listed on any exchange.
Futures contracts held in any futures exchange.
Any Immovable Property situated outside Singapore.
Foreign Currency Deposits.
Foreign Exchange Transactions.
Financial Derivatives relating to any Designated Investment or financial index (e.g., interest rate swaps, currency options).
Units in any Unit Trust (mutual funds, etc.).
Modern and Strategic Assets:
Commodity Derivatives and certain physical commodities (subject to limits).
Emission Derivatives/Allowances.
Insurance-linked Securities (ILS).
Liquidation Claims.
Structured Products.
Private Trusts that invest wholly in Designated Investments.
Investments in private companies (subject to the requirement that the company does not primarily hold Singapore immovable property).
Physical Investment Precious Metals (IPMs) (subject to a cap of 5% of the total investment portfolio).
Key Difference: Local Property
A critical distinction is the treatment of property:
HK FIHV: Profits from immovable property situated outside Hong Kong are a Qualifying Transaction. Profits from HK-situated property are generally excluded.
SG 13O/13U: Profits from immovable property situated outside Singapore are a Designated Investment. Profits from Singapore-situated property are generally excluded.
Dual-Hub Strategy: How Bestar Hong Kong & Bestar Singapore Support Your Business & Family Office
Compare Hong Kong's SFO/FIHV Tax Regime with the Corresponding Scheme in Singapore
As global trade and wealth concentrate in Asia, businesses and Ultra-High-Net-Worth (UHNW) families increasingly adopt a dual-hub strategy—leveraging both Hong Kong and Singapore for their distinct advantages. Firms like Bestar, with established operations in both financial centres, offer a seamless, integrated suite of services critical for market entry, regulatory compliance, and cross-border wealth structuring.
Here is an overview of how Bestar Hong Kong and Bestar Singapore can support your business and family office needs, particularly in navigating the local tax and compliance landscapes.
🇭🇰 Bestar Hong Kong: The Gateway to Greater China
Bestar Hong Kong specializes in streamlining the entry and operations for businesses looking to capitalize on the region's free market and Mainland China connectivity.
1. Streamlining Hong Kong Company Setup & Governance
Company Formation & Registration: Providing expert guidance on selecting the optimal legal structure (e.g., Limited Company) and handling the entire incorporation process with the Companies Registry.
Corporate Secretarial Services: Ensuring full compliance with the Companies Ordinance, managing annual returns, board resolutions, and maintenance of statutory records.
Bank Account Opening Assistance: Offering crucial support in navigating the stringent Know-Your-Customer (KYC) requirements to successfully open corporate bank accounts, which can be challenging for non-resident directors.
2. FIHV Tax Concession & Substance Compliance
For UHNW families, Bestar Hong Kong is equipped to support the Family-owned Investment Holding Vehicle (FIHV) Tax Concession Regime (0% Profits Tax):
Tax Strategy: Advising on the proper structuring of the SFO and FIHV to meet the statutory ownership thresholds (e.g., 95% family ownership).
Substance Requirements: Assisting the SFO to meet the crucial economic substance tests:
Employee Placement: Ensuring the hiring of the minimum two full-time, qualified employees in Hong Kong.
Expenditure Tracking: Establishing accounting systems to track and ensure compliance with the minimum HK$2 million annual operating expenditure.
Tax Filing & Election: Managing the annual tax return process, including making the necessary and irrevocable election for the profits tax concession.
3. Accounting, Audit, and Tax Advisory
Audit & Assurance: Preparing for and facilitating the mandatory annual audit, ensuring financial records comply with Hong Kong Financial Reporting Standards.
Profits Tax Filing: Managing the filing of Profits Tax Returns with the Inland Revenue Department (IRD) and advising on tax-efficient structuring.
🇸🇬 Bestar Singapore: The Hub for Global Wealth Management
Bestar Singapore focuses on supporting the stringent regulatory requirements and robust wealth management frameworks of the city-state, particularly for family offices seeking tax incentives and a residency path.
1. End-to-End Single Family Office (SFO) Advisory
The firm provides comprehensive support for the entire SFO lifecycle in Singapore, from initial structuring to ongoing compliance.
Optimal Structuring: Advising on the best legal vehicles, often involving a Variable Capital Company (VCC) or a Private Limited Company as the SFO and fund vehicle.
SFA Licensing Exemption: Guiding the SFO to qualify for the "Related Corporation" exemption under the Securities and Futures Act (SFA), which exempts the SFO from requiring a full Fund Management Company (FMC) license from the MAS.
2. Securing MAS Tax Incentives (S13O & S13U)
Bestar specializes in the complex application process for Singapore’s primary fund tax incentives, the Section 13O (S$20M AUM) and Section 13U (S$50M AUM) schemes:
Application Management: Preparing and submitting the detailed application package to the Monetary Authority of Singapore (MAS), ensuring all financial and structural disclosures are complete.
Economic Conditions Compliance: Providing advisory to meet the strict quantitative requirements:
Investment Professional (IP) Headcount: Ensuring the required minimum number of Singapore tax resident IPs are hired and compliant.
Local Business Spending (LBS): Calculating and advising on eligible local expenditures to meet the tiered LBS thresholds.
Capital Deployment Requirement (CDR): Formulating a strategy to meet the mandatory local investment thresholds (investing in Singapore-listed assets or qualifying local companies).
Ongoing Compliance: Managing the annual certification process to ensure the SFO and fund vehicle maintain eligibility for the tax exemption throughout the incentive period.
3. HR, Immigration, and Virtual Family Office Services
Work Pass Applications: Assisting the family and key Investment Professionals with Employment Pass (EP) and other relevant work pass applications to establish residency.
Virtual Office Outsourcing: Offering essential administrative outsourcing services, including corporate secretarial, accounting, bookkeeping, and payroll, allowing the family to focus purely on investment strategy.
The Bestar Dual-Hub Advantage
The real value of Bestar lies in its integrated, cross-jurisdictional presence. By working with their offices in both Singapore and Hong Kong, clients can benefit from:
Seamless Cross-Border Advisory: A unified strategy that efficiently manages two distinct compliance and tax regimes, ensuring the structures in Hong Kong and Singapore work in harmony.
Consolidated Compliance: Simplified management of audits, financial reporting, and tax filings across both jurisdictions from a single point of contact.
This integrated approach is essential for businesses and families looking to leverage the best of both Asia's top financial hubs for maximum efficiency and robust wealth preservation.