Our Newsroom

Singapore as a Capital Destination

A steady currency draws capital to Singapore, but stable, predictable policies such as VCCs and Sections 13O and 13U are what keep it here.

Last week, we examined why the Singapore dollar has held its ground against the U.S. dollar. A steady currency, however, only explains why investors are willing to park capital in Singapore. Instead, what keeps their capital here is stable policies and regulations, and Singapore has spent decades building them.

A Home for Funds

One of these rules is the Variable Capital Company (VCC), a legal structure introduced in 2020 that allows an investment fund itself to be based in Singapore. Before the VCC existed, many funds run from Singapore were legally set up in places such as the Cayman Islands, so managers worked in Singapore while the funds were officially based overseas. By creating the VCC, Singapore signalled that it wants to be where funds are based, not merely where money is invested. This signal has been well received, as by the end of 2025, 1,406 VCCs had been incorporated in or re-domiciled to Singapore (Tan, 2026).

Older Foundations: Sections 13O and 13U

The VCC, however, is not the only structure that helps to anchor capital in Singapore. Singapore had also introduced its Resident Fund Scheme in 2006 and its Enhanced-Tier Fund Scheme in 2009, and these are now known as Sections 13O and 13U of the Income Tax Act (Grant Thornton Singapore, 2020). Today, these schemes exempt qualifying funds managed from Singapore from tax on their investment income, provided the fund meets conditions on its size, its local investment staff and its spending in Singapore. Family office funds, for instance, need at least S$20 million under 13O or S$50 million under 13U (Private.law, 2026).

For investors, this exemption is where the appeal lies. Income from qualifying investments would otherwise face Singapore's 17% corporate tax, but an approved fund pays none of it (Private.law, 2026). Singapore also does not tax capital gains and has no estate or inheritance tax (StashAway, 2026), while an onshore fund can obtain a Singapore certificate of residence to claim protection under the country's tax treaties (Private.law, 2026). A family in Shanghai or Dubai, for example, can therefore hold its wealth in a fund managed from Singapore and grow its returns without an added layer of Singapore tax, all under a stable and well-regulated system.

Why Family Offices Keep Choosing Singapore

Singapore had roughly 400 single family offices in 2020. That number reached 1,400 in 2023 and passed 2,000 by the end of 2024, a fivefold increase in just 4 years (StashAway, 2026). However, tax incentives are only one of the reasons why Singapore appeals to family offices. Singapore's legal system, based on English common law, is widely trusted by international investors, and its political and regulatory settings are stable and predictable. Families also gain access to a deep pool of bankers, lawyers and fund professionals, as well as a base within six hours' flight of two-thirds of the world's population. Together with safety, healthcare and international schools, these strengths make Singapore a favourable place to live in as well as to invest from (StashAway, 2026).

This predictability extends to property, where capital reaches Singapore through REITs. S-REITs are generally exempt from tax at the REIT level when they distribute at least 90% of taxable income (Inland Revenue Authority of Singapore [IRAS], 2020). Borrowing rules have also changed gradually: the leverage cap rose from 45% to 50% in 2020 (IRAS, 2020), with a 1.5x minimum interest coverage ratio introduced alongside a single 50% limit in late 2024 (The Edge Singapore, 2024). These kinds of measured and consultative changes give investors greater certainty when committing capital.

The Takeaway

Taken together, these structures show why Singapore has become a destination for capital. VCCs give funds a home, Sections 13O and 13U let qualifying funds grow without an added layer of Singapore tax, and Singapore's wider strengths keep drawing family offices that are here to stay. Most importantly, these rules change gradually and predictably, giving long-term investors confidence to plan ahead. Next week, we turn to the MAS Monetary Policy Statement due by 14 October and what it means for investors.

References