Singapore: Private Client Comparative Guide

1 Legislative framework

1.1 Which legislative provisions govern private client matters in your jurisdiction?

A comprehensive suite of legislation governs private client matters. The key statutes include:

• the Trustees Act 1967;
• the Wills Act 1838;
• the Intestate Succession Act 1967;
• the Income Tax Act 1947;
• the Property Tax Act 1960; and
• the Immigration Act 1959.

1.2 Do any special regimes apply to specific individuals (eg, foreign nationals; temporary residents)?

Yes. Various legislative regimes distinguish between persons and companies that are resident or domiciled in Singapore and those that are not. For instance, resident individuals are taxed at a different rate from non-resident individuals; and the former are entitled to certain personal reliefs and deductions, while the latter are not.

1.3 Which bilateral, multilateral and supranational instruments in effect in your jurisdiction are of relevance in the private client sphere?

N/A.

2 Taxation

2.1 On what basis are individuals subject to tax in your jurisdiction (eg, residence/domicile/nationality)? How is this determined?

In Singapore, income that is accrued in, derived from or received in Singapore will be taxed. For individuals, only personal income tax applies; there is no gift tax, estate tax, inheritance tax or capital gains tax.

The applicable income tax rates depend on an individual's tax residency status in Singapore.

2.2 When does the personal tax year start and end in your jurisdiction?

Individual income tax is determined on a preceding-year basis. The period for a year of assessment is 1 January to 31 December of the preceding year.

2.3 With regard to income: (a) What taxes are levied and what are the applicable rates? (b) How is the taxable base determined? (c) What are the relevant tax return requirements? and (d) What exemptions, deductions and other forms of relief are available?

(a) What taxes are levied and what are the applicable rates?

Resident individuals (including Singapore permanent residents residing in Singapore and foreigners who have stayed or worked in Singapore and who meet the requirements of the Inland Revenue Authority of Singapore) are taxed based on a progressive resident tax rate, which applies a graduated margin tax rate depending on the quantum of chargeable income.

Non-resident individuals are taxed on their employment income at the flat rate of 15% or based on the progressive resident tax rates set out by the Inland Revenue Authority of Singapore, whichever is higher. Non-resident individuals are taxed on other sources of income (eg, director's fees, rental income from properties) at a flat rate of 22%.

(b) How is the taxable base determined?

All income earned in or derived from Singapore is chargeable to income. Generally, overseas income received in Singapore is not taxable, except in some circumstances. The taxable base is determined on the basis of taxable income.

(c) What are the relevant tax return requirements?

Individuals are required to file tax returns if, in the preceding calendar year:

• they had a total income of more than S$22,000;
• they had self-employment income with a net profit of more than S$6,000; or
• they are a non-resident who derived income from Singapore.

(d) What exemptions, deductions and other forms of relief are available?

Only resident individuals are entitled to certain personal reliefs and deductions. Non-resident individuals are not entitled to any personal reliefs or deductions.

Personal income tax relief in Singapore is capped at S$80,000 per year of assessment, which applies to the total amount of all tax reliefs claimed. Examples of these reliefs include:

• earned income relief for individuals who are gainfully employed or carrying on a trade, business, profession or vocation;
• spouse relief/disabled spouse relief for both male and female taxpayers who have supported their spouses;
• working mothers' child relief for women who remain in the workforce after having children; and
• grandparent caregiver relief for working mothers who engage the help of their parents, grandparents, parents-in-law or grandparents-in-law to take care of their children.

2.4 With regard to capital gains: (a) What taxes are levied and what are the applicable rates? (b) How is the taxable base determined? (c) What are the relevant tax return requirements? and (d) What exemptions, deductions and other forms of relief are available?

(a) What taxes are levied and what are the applicable rates?

There is no capital gains tax in Singapore. However, if an individual enters into a series of capital transactions, the gains earned can be considered as income earned and can be taxed accordingly. Whether gains made on the disposal of an asset are capital in nature (which are not taxable) or income in nature (which are taxable) will depend on the circumstances of the case.

(b) How is the taxable base determined?

N/A.

(c) What are the relevant tax return requirements?

N/A.

(d) What exemptions, deductions and other forms of relief are available?

N/A.

2.5 With regard to inheritances: (a) What taxes are levied and what are the applicable rates? (b) How is the taxable base determined? (c) What are the relevant tax return requirements? and (d) What exemptions, deductions and other forms of relief are available?

(a) What taxes are levied and what are the applicable rates?

There is no estate tax or inheritance tax in Singapore.

(b) How is the taxable base determined?

N/A.

(c) What are the relevant tax return requirements?

N/A.

(d) What exemptions, deductions and other forms of relief are available?

N/A.

2.6 With regard to investment income: (a) What taxes are levied and what are the applicable rates? (b) How is the taxable base determined? (c) What are the relevant tax return requirements? and (d) What exemptions, deductions and other forms of relief are available?

(a) What taxes are levied and what are the applicable rates?

There is no capital gains tax in Singapore. As such, gains from the sale of property, shares or financial instruments in Singapore are generally not taxable. However, an individual who enters into a series of capital transactions may be considered as income earned and be taxed accordingly – see question 2.4(a) above.

(b) How is the taxable base determined?

N/A.

(c) What are the relevant tax return requirements?

N/A.

(d) What exemptions, deductions and other forms of relief are available?

N/A.

2.7 With regard to real estate: (a) What taxes are levied and what are the applicable rates? (b) How is the taxable base determined? (c) What are the relevant tax return requirements? and (d) What exemptions, deductions and other forms of relief are available?

(a) What taxes are levied and what are the applicable rates?

Property tax is levied on property ownership whether the property is occupied by the owner, rented out or left vacant. Property tax in Singapore is calculated by multiplying the annual value of the property with the relevant applicable property tax rates.

For residential properties, owner-occupier tax rates range from 0% to 23% (0% to 32% from 1 January 2024). Residential properties that are not occupied by the owner have an applicable tax rate ranging from 11% to 27% (12% to 36% from 1 January 2023).

The tax rate for non-residential properties is 10%.

Stamp duty is levied on the execution of documents transferring:

• interests in Singapore immovable property;
• shares of Singapore-incorporated companies; and
• shares of foreign-incorporated companies registered in a Singapore branch register.

However, no stamp duty is payable on Singapore immovable property or shares if the transfer:

• is in accordance with a distribution under a testamentary will or the laws of intestacy; or
• is to a spouse pursuant to a court order made in divorce proceedings.

Stamp duty is also levied on documents relating to leases of immovable property in Singapore, such as tenancy agreements and leases. The applicable stamp duty payable depends on the nature of the lease.

(b) How is the taxable base determined?

Property tax in Singapore is calculated by multiplying the annual value of the property with the relevant applicable property tax rates. The annual value of a property is the estimated gross annual rent of the property if it were to be rented out. It is determined based on estimated market rentals of similar or comparable properties.

(c) What are the relevant tax return requirements?

The annual property tax bill must be paid by 31 January. All other property tax notices must be paid within one month of the date of notice.

(d) What exemptions, deductions and other forms of relief are available?

Between 1 January 2023 and 31 December 2023, all owner-occupied residential properties are eligible for a property tax rebate of 60% of the property tax payable for 2023.

In addition, various other property tax reliefs are applicable in the following scenarios:

• individuals or married couples who own and live in a residential property;
• an individual owner whose house is being demolished and rebuilt for subsequent owner-occupation;
• an individual owner who purchased a piece of land to construct a house for subsequent owner-occupation; or
• a non-residential property owned and used by a registered charity for charitable, public religious worship or educational purposes.

2.8 With regard to any other direct taxes levied in your jurisdiction: (a) What taxes are levied and what are the applicable rates? (b) How is the taxable base determined? (c) What are the relevant tax return requirements? and (d) What exemptions, deductions and other forms of relief are available?

(a) What are they and what are the applicable rates?

N/A.

(b) How is the taxable base determined?

N/A.

(c) What are the relevant tax return requirements?

N/A.

(d) What exemptions, deductions and other forms of relief are available?

N/A.

2.9 With regard to any indirect taxes levied in your jurisdiction: (a) What taxes are levied and what are the applicable rates? (b) How is the taxable base determined? (c) What are the relevant tax return requirements? and (d) What exemptions, deductions and other forms of relief are available?

(a) What are they and what are the applicable rates?

Goods and services tax (GST) is applicable to the supply of goods and services in Singapore. As of 1 January 2023, the prevailing rate is 8%. This will be increased to 9% from 1 January 2024.

Other forms of indirect taxes in Singapore include:

• excise duties on motor vehicles, alcohol and tobacco products; and
• customs duties on petroleum products, biodiesel blends and motor vehicles.

(b) How is the taxable base determined?

N/A.

(c) What are the relevant tax return requirements?

N/A.

(d) What exemptions, deductions and other forms of relief are available?

Travellers are granted import relief from goods and services tax on new goods that are purchased overseas and brought into Singapore for their personal use. The relief amount is based on the length of the period which the traveller has spent outside Singapore.

3 Succession

3.1 What laws govern succession in your jurisdiction? Can succession be governed by the laws of another jurisdiction?

For non-Muslims in Singapore, testamentary freedom is unrestricted, subject to:

• the provisions of the Inheritance (Family Provision) Act (Cap 138), which allows the court to provide reasonable maintenance to the deceased's dependant out of the deceased's net estate; and
• the limits set out in question 4.4.

Can succession be governed by the laws of another jurisdiction?

Yes. Issues of succession are governed by:

• the law of the place of the deceased's domicile (ie, the 'lex domicilii'), in the case of movable property; or
• the law where the immovable property is situated (ie, the 'lex situs'), in the case of immovable property.

3.2 How is any conflict of laws resolved?

See question 3.1.

3.3 Do rules of forced heirship apply in your jurisdiction?

Forced heirship rules apply only to Muslim persons who are domiciled in Singapore at the time of their death. The estate for Singapore-domiciled Muslim individuals must be distributed in accordance with Islamic inheritance laws, as provided for under the Administration of Muslim Law Act.

Forced heirship rules do not apply to non-Muslims in Singapore.

3.4 Do the rules of succession rules apply if the deceased is intestate?

If the deceased is intestate, the deceased's property will be distributed in accordance with the rules under the Intestate Succession Act (Cap 146).

3.5 Can the rules of succession be challenged? If so, how?

N/A.

4 Wills and probate

4.1 What laws govern wills in your jurisdiction? Can a will be governed by the laws of another jurisdiction?

In Singapore, wills are governed by the Wills Act.

Can a will be governed by the laws of another jurisdiction?

Yes. Under Singapore law, a will is treated as properly executed if its execution conforms to the law in force of any of the following (Section 5 of the Wills Act 1838):

• the place where the will was executed;
• the jurisdiction where the testator was domiciled either at the time of execution of the will or at his or her death;
• the jurisdiction in which the testator was habitually resident either at the time of the execution of the will or at his or her death; or
• the jurisdiction in which the testator was a national either at the time of the execution of the will or at his or her death.

4.2 How is any conflict of laws resolved?

See question 3.1.

4.3 Are foreign wills recognised in your jurisdiction? If so, what process is followed in this regard?

Yes. A will created in a foreign jurisdiction is recognised if its execution conforms to the relevant law (see question 4.1). If the will was properly executed, the executor may extract the grant of probate in the Singapore court and distribute the assets according to the will.

If the grant of probate was extracted in another jurisdiction, the process of resealing a foreign grant of probate in Singapore gives legal recognition to that original foreign grant of probate.

The Probate and Administration Act (Cap 251) provides the court with the power to reseal a grant of probate obtained from a Commonwealth country such that it has the same force and effect and has the same operation in Singapore.

A grant of probate obtained from a non-Commonwealth country cannot be resealed in Singapore. The personal representatives will need to apply for a fresh grant in Singapore to administer any Singapore assets. In such cases, an affidavit of foreign law attesting to the succession laws of the country of domicile will be required.

4.4 Beyond issues of succession discussed in question 3, are there any other limitations to testamentary freedom?

For non-Muslims who are not subject to forced heirship rules, the limitations to testamentary freedom are as follows:

• The court may provide reasonable maintenance to the deceased's dependant out of the deceased's net estate under the Inheritance (Family Provision) Act (Cap 138). A 'dependant' is defined as:
• • a spouse;
  • a child (of any gender or age) who is by reason of physical or mental incapacity incapable of maintaining himself or herself;
  • an infant son; or
  • an unmarried daughter.
• Assets held in joint tenancy assets will be subject to the rule of survivorship. This means that the surviving joint owner will be entitled to the whole ownership of the asset once the other joint owner passes away.
• Funds held through a deceased's central provident fund (CPF) account (applicable to Singapore citizens and permanent residents) cannot be disposed of via a will, but only through the appropriate instrument of a CPF nomination.
• If the testator makes a trust nomination in his or her insurance policy in favour of a specified beneficiary, a trust is created over the testator's insurance proceeds and the testator cannot override the trust nomination using a will.
• If the testator makes a revocable nomination in his or her insurance policy in favour of a specified beneficiary, the insurance proceeds will go to the nominee unless the testator subsequently revokes the nomination.

4.5 What formal requirements must be observed when drafting a will?

The formal requirements which must be observed when drafting a will, in order for the will to be valid, are as follows:

• The will must be in writing;
• The testator must be at least 21 years old; and
• The testator must sign the will at the foot of the will. The testator's signature must be witnessed by two or more witnesses, who must also sign the will in his or her presence. The two main witnesses cannot be beneficiaries of the will or spouses of beneficiaries.

4.6 What best practices should be observed when drafting a will to ensure its validity?

The person drafting the will should ensure that:

• the formalities are complied with;
• the contents of the will accurately reflect the testator's wishes; and
• the will was not procured by the undue influence of the testator's relatives or friends. This may involve:
• • taking the testator's instructions in person and away from any third parties; and
  • executing the will in the absence of any potential beneficiaries.

If the testator may be suffering from dementia at the time of making the will, a medical report to confirm that the testator has the testamentary capacity to make the will should be obtained, as close to the time of making the will as possible.

4.7 Can a will be amended after the death of the testator?

No. A will cannot be amended after the death of the testator. A will is only revocable by the testator at any time before his or her death.

However, the beneficiaries named in the will can, by consent, vary the terms of the will and redistribute the assets of the deceased according to the family arrangement by executing a deed of family arrangement.

4.8 How are wills challenged in your jurisdiction?

Common grounds to challenge the validity of a will are as follows:

• The will was made by fraud;
• The testator did not have the testamentary capacity to make the will;
• The testator made the will under undue influence; or
• The formalities of the will were not complied with.

Procedurally, a will is challenged by the filing of a caveat in court against a grant of probate in respect of the deceased's estate, which declares that the caveator has an interest either in a challenge against the will or in the deceased's estate. Once a caveat has been filed against the will, no grant of probate can be issued without the caveator's knowledge.

If a grant of probate has been issued, the challenge should be brought within six months of the issuance of the grant. If the will is contested beyond this six-month window, the person bringing the challenge must provide a substantive reason for the delay.

4.9 What intestacy rules apply in your jurisdiction? Can these rules be challenged?

Intestacy rules in Singapore are governed by the Intestate Succession Act and cannot be challenged.

However, beneficiaries can apply for maintenance under the Inheritance (Family Provision) Act (Cap 138) on the ground that they are not reasonably provided for by the distribution of a deceased's estate, and accordingly can apply to the court for an order altering the distribution of the deceased's estate for the maintenance of that dependant.

5 Trusts

5.1 What laws govern trusts or equivalent instruments in your jurisdiction? Can trusts be governed by the laws of another jurisdiction?

Trusts or equivalent instruments in Singapore are governed by the Trustees Act 1967, as well as the relevant common law rules.

Can trusts be governed by the laws of another jurisdiction?

Yes. The proper law of an express trust is the law chosen by the trustee or, in the absence of such a choice, the system of law to which the trust has the closest connection. Factors that determine close connection include:

• the domicile of the parties; and
• the place of incorporation of the corporate vehicle set up for the trust.

5.2 How is any conflict of laws resolved?

See question 5.1. Where there is no express choice of law, the court will determine the governing law of the trust by first considering whether the intention of the parties as to the governing law can be inferred from the circumstances. If this cannot be done, the court will then identify the system of law with which the trust has the closest and most real connection.

5.3 What different types of structures are available and what are the advantages and disadvantages of each, from the private client perspective?

Inter vivos trust: The trust is created in the settlor's lifetime and the assets are placed in the trust during the settlor's life. The advantages of this type of trust include that it protects the settlor's assets from probate proceedings, forced inheritance legislation, business losses and creditor claims.

Testamentary trust: The trust is formed in the settlor's will. Upon the settlor's death, the assets pass into the trust as specified in the will; there is no trust while the settlor is alive. This type of trust is advantageous where a settlor has:

• young children;
• dependants with special needs; or
• beneficiaries who are unable to manage their inheritance.

5.4 Are foreign trusts recognised in your jurisdiction? If so, what process is followed in this regard?

Yes. Generally, a valid trust requires certainty as to intention, subject matter and objects.

5.5 How are trusts created and administered in your jurisdiction?

No answer submitted for this question.

5.6 What are the legal duties of trustees in your jurisdiction?

Trustees have the following duties under the common law and/or statute (ie, under the Trustees Act):

• a duty to know the terms of the trust;
• a duty to safeguard trust assets;
• a duty to furnish the accounts of the trust for inspection upon request;
• a duty to ensure that the trust is not used for illegal purposes;
• a duty to make and optimise returns on investment when exercising any power in respect of investments;
• a duty to prepare and maintain estate accounts;
• a duty to collect and realise assets;
• a duty to pay debts;
• a duty to distribute the assets in accordance with the will or the laws of intestacy;
• a duty of loyalty and a duty not to put themselves in a position of conflict of interest; and
• a duty of care in exercising any power, carrying out any duty or doing any act referred to in the First Schedule of the Trustees Act – for example, when:
• • exercising any power of investment;
  • carrying out any duty related to the making of investments;
  • exercising any power of acquiring land; or
  • exercising any power in relation to land thus acquired.

5.7 What tax regime applies to trusts in your jurisdiction? What implications does this have for settlors, trustees and beneficiaries?

As the settlor has divested his or her assets into the trust, the settlor will not be subject to income tax.

Trustees (whether individuals or companies) are subject to tax at the prevailing corporate rate (currently 17%). Trusts can be accorded tax transparency in respect of a beneficiary who is entitled to the trust income and is resident in Singapore (ie, the trustee is not subject to tax at the trustee level; instead, the beneficiaries are subject to tax). There are also specific tax incentives and tax exemptions that may apply to trusts.

5.8 What reporting requirements apply to trusts in your jurisdiction?

No registration is required for any trust in Singapore. There is thus no public register of owners, beneficial owners, trustees or other persons with significant control or influence over trusts established or resident in Singapore.

5.9 What best practices should be observed in relation to the creation and administration of trusts?

It is best to seek legal advice if you are thinking of creating a trust, to ensure that the formalities required for the validity of a trust are met, and that the lawyer can assist you in structuring the type of trust that will best serve your objectives.

Trustees should take care to document their decisions and communication during their administration of the trust. Examples of decisions and actions that should be properly documented include:

• distribution decisions;
• investment decisions;
• verbal communications with beneficiaries; and
• principal and income allocations.

6 Trends and predictions

6.1 How would you describe the current private client landscape and prevailing trends in your jurisdiction? Are any new developments anticipated in the next 12 months, including any proposed legislative reforms?

The current private client landscape in Singapore is as dynamic as ever. While Singapore has always enjoyed a reputation as a trusted, vibrant and well-regulated international financial centre in Asia, recent global and regional factors – such as the volatile geopolitical situation and risks in the region, the COVID-19 pandemic and increased global uncertainty – have augmented Singapore's reputation as an attractive wealth management hub. This in turn has led to a significant increase in fund inflows into Singapore through family offices. In 2023, there were 700 family offices in Singapore, up from 400 at the end of 2020.

The demand for family offices and professionals with specialised skills to set up and run family offices is likely to increase in the coming years. Family offices in Asia are expected to double their assets under management to $5.3 trillion by 2025.

Are any new developments anticipated in the next 12 months, including any proposed legislative reforms?

In 2022, Singapore announced stricter criteria around assets under management, local investments and business spending for family offices to qualify for tax incentives.

7 Tips and traps

7.1 What are your top tips for effective private client wealth management in your jurisdiction and what potential sticking points would you highlight?

It is not uncommon for private wealth disputes involving family set-up trusts to come before the courts. To ensure that the settlor, the trustee and the beneficiaries are not embroiled in costly and protracted litigation, it is best for private clients to seek professional advice when considering their estate planning and wealth management arrangements, including from lawyers for a litigation-proof perspective.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.