Background

On 19 August 2026, the Monetary Authority of Singapore (“MAS”) announced three measures to reinforce Singapore’s position as a leading asset management hub, especially for hedge funds. The package arrives two months after Hong Kong proposed broadening its carried-interest tax concession and follows a July 2026 letter from the Alternative Investment Management Association (“AIMA”) flagging early signs of member firms considering relocating portfolio managers and senior staff to Hong Kong.

The key measures are:

1. tax exemption on profit-related returns earned by fund managers and investment professionals from qualifying funds under Sections 13D, 13O, 13OA, 13U and 13V of the Income Tax Act 1947, targeted for Year of Assessment 2027 with implementation details to follow at Budget 2027;

2. MAS Hedge Fund Investment Programme that will co-invest directly with managers committing to establish or deepen a Singapore presence; and

3. Investment Management Track under the Overseas Networks & Expertise (“ONE”) Pass, which will recalibrate how salaries are assessed for immigration purposes to recognise performance-linked pay alongside fixed monthly salary. 

Key Observations

1. Individual-level relief: Unlike earlier fund-level tax incentives, this exemption targets the profit share received by managers and professionals personally, while still requiring the underlying funds to meet existing economic substance and headcount conditions. This targeted tax break is intended to enhance Singapore’s edge and appeal as an asset management hub.
   
   
2. Broader scope: MAS’s application of the tax exemption to profit-related returns could capture a wider range of performance-linked arrangements spanning hedge funds, private equity and single-family offices. The precise perimeter, however, awaits Budget 2027 legislation.
    
   
3. Three instruments: Tax relief is paired with direct capital deployment (the Hedge Fund Investment Programme) and immigration reform (the ONE Pass track). Direct co-investment signals MAS acting as an ecosystem participant, not only a regulator setting rules from the sidelines.  
   
   
4. Improving quality jobs for locals: Recalibrating the ONE Pass salary assessment to count performance-linked income which better reflect industry compensation norms to attract global leaders and senior investment professionals who already contribute—or have strong potential to contribute—to Singapore’s asset management sector. This will in turn bolster the industry’s global competitiveness while sustaining quality job creation for Singaporeans.
   
   
5. Timing as signal: Announcing the direction of travel some eighteen months ahead of full legislative detail suggests MAS is prioritising early reassurance for firms weighing relocation decisions now, rather than waiting for a fully specified Budget 2027 package – a signal that policy predictability is itself being treated as a competitive advantage.   
   
   

What’s Next?

The real work begins at Budget 2027, when Ministry of Finance (“MOF”) must define profit-related returns with enough prevision to be administrable while resisting characterisation as ordinary employment income. Expect scrutiny of the boundary between performance-linked returns and salary or bonus, anti-avoidance safeguards against artificial profit-sharing arrangements, and clarification of how single-family offices under Section 13O under the Income Tax Act 1947 are treated relative to institutional managers. Minister Chee Hong Tat’s framing of the Singapore-Hong Kong dynamic as “not zero-sum” is worth taking seriously as strategy rather than diplomacy: it suggests MAS is positioning Singapore’s value proposition around depth of ecosystem and policy predictability, not solely tax arbitrage. 

How Can We Help?

Capital Governance can assist asset managers and fund management companies in:  

1. Substance & Eligibility Benchmarking: Review qualifying fund structures under Sections 13D, 13O, 13OA, 13U and 13V against existing economic substance and headcount requirements, to confirm readiness for the new exemption once Budget 2027 detail is released.
   
   
2. Hedge Fund Investment Programme Readiness: Advise on the licensing, governance and compliance groundwork required for managers evaluating establishing or deepening a regulated presence in Singapore under the new programme.   
   

And more …