Singapore and Hong Kong compete to cut taxes for investors in escalating financial hub rivalry

Asia’s two premier financial capitals are locked in a tax-cutting arms race, and global fund managers are the ones holding the scorecards.

Singapore’s Monetary Authority announced on August 19 that it would exempt certain investment profits from taxation for fund managers, including those running single family office funds. The move came roughly two months after Hong Kong gazetted its own bill expanding tax-free treatment of carried interest and removing caps for private funds and family offices.

What Singapore is offering

The MAS tax exemptions cover profits from managing qualifying funds, a category broad enough to pull in the single family office crowd that has been flooding into the city-state over the past several years. Singapore is also expanding its Overseas Networks & Expertise Pass, which gives investment professionals a smoother path to working in the country.

The full details of how these measures will work in practice are expected to land in the 2027 budget. National Development Minister Chee Hong Tat has emphasized the need for industry visibility in strategic planning, signaling that the government wants fund managers to see Singapore as a long-term home rather than a tax arbitrage pit stop.

Singapore’s asset management sector has swelled to roughly S$7 trillion in assets under management, growing at an average annual clip of 7.5% over the past five years.

Hong Kong fired first

In June, Hong Kong gazetted a bill proposing broader tax breaks on carried interest, the performance-based compensation that private equity and venture capital managers live for. The bill also introduced exemptions for private funds and family offices, with provisions effective from the 2025/26 tax year.

The Alternative Investment Management Association warned MAS in July that Hong Kong’s moves could widen the tax gap between the two cities, potentially affecting both talent retention and fund mandates flowing into Singapore. Singapore responded less than two months later.

The talent dimension

Singapore’s expansion of the Overseas Networks & Expertise Pass is a direct acknowledgment of this reality. Cutting taxes on fund profits is only half the equation. If qualified portfolio managers and analysts can’t easily relocate or stay, the tax incentives become a nice brochure that nobody reads.

Hong Kong faces its own version of this challenge. The city has dealt with talent outflows in recent years driven by a combination of political factors and pandemic-era restrictions. Its tax moves are partly an attempt to reverse that trend by making the financial math compelling enough to override other considerations.

And then there’s Dubai, sitting in the background as a third option that both cities would prefer investors not think too hard about. The Gulf emirate’s zero-income-tax regime and growing financial infrastructure have made it a credible alternative for managers who might have previously defaulted to one of the two Asian hubs.

What this means for global capital flows

As both hubs refine their incentive structures, fund managers will need to navigate increasingly complex regulatory landscapes. Tax incentives that look generous on the surface sometimes come with strings attached, whether in the form of substance requirements, reporting obligations, or restrictions on the types of investments that qualify.

For the crypto and digital asset industry specifically, both Singapore and Hong Kong have been actively courting digital asset firms, and tax treatment of fund profits from crypto investments could become a differentiating factor for managers running tokenized fund structures or digital asset strategies. Singapore’s MAS has taken a measured but open approach to crypto licensing, while Hong Kong has been building its own regulatory framework for virtual asset service providers.

The next inflection point will likely come with Singapore’s 2027 budget, when the specifics of the MAS announcement get translated into legislation.

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