What will change under the new 2027 scheme? Reading the three cities through carried interest, personal income tax, and visas
In August 2026, the Monetary Authority of Singapore (MAS) announced a new policy package to further strengthen Singapore’s competitiveness as an investment management hub.
What deserves attention in this announcement is that it is not merely a set of tax incentives for funds.
In addition to new tax measures for certain “profit-related returns” arising from fund management services, the package combines an investment programme to attract hedge funds with a visa framework intended to bring world-class investment management talent to Singapore.
In other words, Singapore is not simply trying to “attract the world’s money.”
It is trying to attract the fund managers, CIOs, Investment Professionals, and the “investment decisions themselves” that manage that money to Singapore.
Behind this lies intense competition for talent among international financial centers, including Hong Kong.
When this movement is compared with Japan, it becomes clearer what will matter in the competition among financial hubs going forward.
Singapore Is Attracting Not Only “Assets” but Also the “People Who Manage Them”
Singapore has rapidly increased its presence as one of Asia’s leading asset and wealth management hubs.
Private banks, asset management companies, hedge funds, private equity firms, External Asset Managers (EAMs), and family offices have gathered there.
The lawyers, accountants, tax professionals, fund administrators, and other professional advisers who support them have also accumulated in Singapore.
Until now, discussions of Singapore’s financial policy have tended to focus on “vehicles” and tax regimes such as the Variable Capital Company (VCC) and the 13O and 13U schemes for family offices.
However, MAS’s latest policy has moved one step further.
The focus is beginning to shift
from “where assets should be placed” to “who should manage them in Singapore.”
That shift is now under way.
The Key Point Is the Tax Treatment of “Profit-Related Returns”
Among the measures announced, the item attracting particular attention is the new tax treatment for certain “profit-related returns” arising from fund management services.
In the fund management world, fund managers may receive compensation linked to investment performance, in addition to ordinary salary and bonuses.
Carried interest, which is well known in private equity and venture capital, is a representative example.
The new scheme indicates that profit-related returns received as consideration for fund management services from certain qualifying funds may be exempt from tax, subject to specified conditions.
It is important to note that this is not a reduction in Singapore’s personal income tax itself.
Personal income tax for Singapore residents is progressive, and the current top marginal rate is 24%.
What has been announced is not a scheme that exempts ordinary salary or general bonuses from tax, but a new tax treatment for specific profit-related returns in the investment management industry.
The scheme is scheduled to apply from Year of Assessment (YA) 2027, and the detailed requirements are expected to be clarified in Budget 2027.
Accordingly, Budget 2027, expected around February 2027, is likely to become an important event for Singapore’s investment management industry.
Hong Kong Has Actually Moved First
Hong Kong is indispensable to understanding Singapore’s latest policy.
Ahead of Singapore, Hong Kong has introduced tax incentives for carried interest that meets certain requirements since 2021.
In June 2026, the Hong Kong government also published the Inland Revenue (Amendment) (Preferential Tax Regimes for Funds, Family-owned Investment Holding Vehicles and Carried Interest) Bill 2026.
The amendment bill includes:
• Expansion of the definition of “fund”
• Expansion of eligible investment assets
• Removal of the 5% threshold for certain incidental transactions
• Relaxation of tax exemptions for SPVs and family-owned SPVs
• Expansion of the preferential tax regime for carried interest
among other measures.
In other words, Hong Kong is not merely lowering the tax rate on carry; it is seeking to redesign funds, family offices, investment assets, and carried interest as one integrated asset and wealth management policy.
As of September 2026, however, this amendment remains at the bill stage. It is therefore more accurate to understand the situation as “a bill for further expansion of the scheme was introduced in 2026,” rather than to state definitively that “Hong Kong amended the scheme in 2026.”
Hong Kong Also Requires “Economic Substance”
That said, Hong Kong’s policy is not as simple as “financial institutions will come if the tax rate is set at 0%.”
The 2026 bill indicates an intention to introduce a tax reporting mechanism into the unified tax exemption regime for funds and to establish Economic Substance requirements similar to those applied to tax incentives for family-owned investment holding vehicles.
This is a very important change.
In Singapore as well, Substance, including personnel, spending, and investment activities, has become important in schemes relating to family offices and funds.
In other words, both cities are aiming to become
not “places where assets are merely parked to receive tax incentives,”
but
“places where people are actually based, investment decisions are made, and financial businesses are conducted.”
That is the direction they are pursuing.
Singapore’s “Three-Part Package” Is Not Only About Tax
What is even more interesting is that Singapore is not attempting to change only its tax system.
MAS has also announced a new “Hedge Fund Investment Programme.”
Through capital allocations to leading hedge fund managers that establish or expand their presence in Singapore, the policy seeks to strengthen the hedge fund ecosystem itself.
Talent policy is also moving.
Singapore has the Overseas Networks & Expertise Pass (ONE Pass) as a residency pathway to attract world-class talent.
This time, the government indicated that it will introduce a new “Investment Management Track” for the investment management industry.
In investment management, many fund managers receive a larger portion of compensation linked to investment performance than in fixed salary.
For that reason, ordinary salary income alone may not properly capture the economic value of world-class investment talent.
The new scheme can be understood as a talent attraction measure that takes account of the compensation structure unique to the investment management industry.
In other words, Singapore is seeking to move three things at the same time:
tax,
capital,
and visas and talent.
These are the three elements it is trying to move at the same time.
This is the true significance of the latest policy.
Is Japan Really at a Disadvantage?
Let us compare this with Japan.
Japan’s income tax is progressive, with a top rate of 45%, and local inhabitant tax and other taxes are added on top.
If one compares only the top marginal rate, Japan is higher than Singapore or Hong Kong.
As a result,
“Japan is at a tax disadvantage in attracting outstanding fund managers”
is an argument that tends to arise.
However, the reality is somewhat more complex.
In 2021, Japan’s Financial Services Agency clarified the tax treatment of carried interest.
Where an individual fund manager, as a partner, receives a distribution of partnership profits in excess of the manager’s capital contribution ratio, the so-called carried interest, that distribution is subject to pass-through taxation if the profit allocation is recognized as having economic rationality.
If the underlying partnership profit consists of capital gains from the transfer of shares, the individual’s income tax is calculated under separate taxation at 20%.
Accordingly,
“in Japan, all carried interest is taxed as employment income at the top marginal rate”
is not an accurate understanding.
Japan also has institutional arrangements that are conscious of international fund managers.
Singapore, Hong Kong, and Japan from the Perspective of Financial Talent
From the standpoint of global fund managers and CIOs, what differences do the three financial centers actually present?
The important point is not to compare only “what percentage the top marginal personal income tax rate is.”
How is compensation linked to investment performance treated?
What schemes are available for funds and family offices?
Are there mechanisms that make it easier for highly skilled foreign financial talent to relocate?
These questions need to be considered together.
Singapore, Hong Kong, and Japan: A Comparison of Financial Hubs from the Perspective of Financial Talent
| Singapore | Hong Kong | Japan | |
| Personal income tax | Residents are subject to progressive taxation, with a top rate of 24%. | Salaries Tax, with progressive rates and a standard rate method. | Top income tax rate of 45%, plus local inhabitant tax and other taxes. |
| Carry and similar returns | A scheme to exempt certain profit-related returns from YA 2027 is planned. | Tax incentives are available for qualifying carried interest; the 2026 bill would expand the scope. | Certain carried interest may be subject to separate taxation at 20% if the underlying profit consists of capital gains from the transfer of shares. |
| 2026 developments | MAS announced new measures to strengthen Singapore as an investment management hub. | A bill was introduced to expand fund, SFO, and carried interest tax regimes. | Existing international financial center policy continues. |
| Talent policy | An Investment Management Track is planned for the ONE Pass. | Hong Kong continues to attract financial and investment management talent. | Residency schemes and other measures for highly skilled foreign talent are available. |
| FO / fund policy | 13O, 13U, VCC, and related schemes. | Preferential schemes for funds and SFOs. | Support for fund entry and related initiatives. |
| Next point | Details of the scheme in Budget 2027. | Passage and implementation of the 2026 bill. | How far tax, talent, and FO policy can be integrated. |
This comparison reveals something interesting.
Japan has a certain tax treatment for carried interest, so it is not the case that “Japan is doing nothing.”
Even so, the reason Singapore and Hong Kong stand out may lie less in individual tax rates than in the fact that they are moving tax systems, fund regimes, family office policy, and foreign talent policy together as a “financial hub strategy.”
An Era of Competing for “People,” Not “Money”
The most important change visible from MAS’s announcement is that the axis of competition among global financial centers itself is beginning to shift.
Previously,
“Where should a fund be established?”
“Where should assets be placed?”
were the central questions.
Now, however, the competition extends to questions such as:
“Where will the CIO live?”
“Where will the fund manager make investment decisions?”
“In which country should the investment management team be based?”
“Where should the next generation of investment talent be developed?”
This is now part of the competition.
This has direct relevance for family offices.
Establishing a family office entity or investment vehicle is not an end in itself.
Advanced asset administration becomes possible only when excellent investment talent, private banks, EAMs, lawyers, tax professionals, fund administrators, and other professional advisers exist around the family office and can be used effectively.
In other words, Singapore and Hong Kong are not competing only over the “number” of family offices.
They are competing over the ecosystem of financial, legal, tax, and investment talent that forms around them.
The Country with the Lowest Tax Rate Does Not Necessarily Win
Of course, financial talent does not decide where to live based solely on tax rates.
Stability of the legal system, financial regulation, an English-language environment, education, public safety, housing costs, the cost of living, the ease of family life, airport access, and proximity to investors and financial institutions all matter.
These factors also have a significant impact.
For family offices in particular, the issue is not only where the owner lives, but also where the family and the next generation will live.
In that sense, competition among financial hubs cannot be measured only by comparing corporate tax rates or personal income tax rates.
However, when cities with similarly strong living environments and financial infrastructure compete, differences in tax systems and residency schemes may ultimately have a significant influence on talent’s decision-making.
That is precisely why Hong Kong and Singapore continue to make detailed refinements to their schemes.
The Next Point to Watch Is Budget 2027
There is still much that remains unclear about Singapore’s new scheme for profit-related returns.
What types of funds will be covered?
How far will “profit-related returns” be recognized?
To what extent will performance-linked compensation other than carried interest be included?
How will the requirements differ for individuals, partnerships, and corporations?
And what level of Substance, including personnel, spending, and investment activities, will be required?
These details will need to be confirmed in Budget 2027.
Accordingly, it would be premature at this stage to understand the announcement as meaning that “Singapore has exempted fund managers’ personal income tax.”
At the same time, the direction of policy is already clear.
The global investment management business has entered a competition not only for capital, but also for “talent and investment decisions.”
When Hong Kong moves, Singapore moves.
When Singapore moves, other financial cities, including Tokyo, will again be asked to demonstrate their competitiveness.
Tax rates alone do not determine the attractiveness of a financial center.
Regulation, tax systems, visas, living environment, education, legal systems, financial infrastructure, access to investors, and an ecosystem that attracts outstanding talent all matter.
Taken together,
“can a country be built that is chosen by the world’s best financial talent?”
is what is now being tested.
Singapore’s new scheme toward 2027 symbolizes that Asia’s competition among financial hubs has entered its next stage: from a competition to attract assets to a competition to attract talent and investment decisions.
At FOPAJ, once the details of the scheme are published in Budget 2027, we would like to examine again the scope of the covered profit-related returns and the implications for family office and investment management practice.
References
- Monetary Authority of Singapore (MAS), “MAS Introduces Measures to Strengthen Singapore’s Competitiveness as a Leading Asset Management Hub”, August 2026.
- Inland Revenue Authority of Singapore (IRAS), “Individual Income Tax Rates”.
- Ministry of Manpower (MOM), Singapore, “Overseas Networks & Expertise Pass (ONE Pass)”.
- Government of the Hong Kong Special Administrative Region, “Inland Revenue (Amendment) (Preferential Tax Regimes for Funds, Family-owned Investment Holding Vehicles and Carried Interest) Bill 2026”, June 2026.
- Inland Revenue Department, Hong Kong, “Tax Concession for Carried Interest”.
- Financial Services Agency (FSA), Japan, “Specially Permitted Businesses for Foreign Investors, etc. / Tax Treatment of Carried Interest”.
- National Tax Agency (NTA), Japan, “Income Tax Rates”.
Notes
This article is based on information publicly available as of September 2026 from the Monetary Authority of Singapore (MAS), the Inland Revenue Authority of Singapore (IRAS), the Ministry of Manpower (MOM), the Government of the Hong Kong Special Administrative Region, the Hong Kong Inland Revenue Department, Japan’s Financial Services Agency (FSA), the National Tax Agency (NTA), and other relevant official sources. The Family Office Practitioners Japan (FOPAJ) has independently compiled and analysed this information from the perspective of family office and asset management practice.
Singapore’s new tax treatment for certain profit-related returns is scheduled to apply from Year of Assessment (YA) 2027. However, as of the date of this article, detailed eligibility criteria and application requirements have not yet been announced. Further official guidance, including information expected to be provided in Budget 2027, will therefore need to be reviewed. Similarly, Hong Kong’s proposed expansion of the relevant tax regimes in 2026 remains at the legislative stage as of the date of this article and may be subject to change during the legislative, enactment, and implementation processes.
This article is provided for general informational purposes only and does not constitute legal, tax, investment, immigration, or other professional advice, nor does it constitute a recommendation regarding any particular jurisdiction, tax regime, financial product, investment strategy, family office structure, or immigration arrangement. Any specific investment, tax, legal, immigration, or other decisions should be made with reference to the latest applicable laws, regulations, and official guidance and, where appropriate, in consultation with suitably qualified professional advisers.
