Singapore & Hong Kong as Asian Wealth Management Centres & Overview of CRS AEOI

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1 Singapore & Hong Kong as Asian Wealth Management Centres & Overview of CRS AEOI Irene Lee Head of Business Development Vietnam Wealth Management Forum Ho Chi Minh 7 th September 2017

2 Plan B: May s Elaborate Plan? 2

3 Trong mỗi cuộc khủng hoảng, là hạt giống của cơ hội IN EVERY CRISIS LIES THE SEED OF OPPORTUNITY 3

4 Agenda Overview Asia in General Singapore s Ties with Vietnam Singapore and Hong Kong as Wealth Management Centres Singapore & Hong Kong Companies : Brief Summary on CRS & AEOI Tax Compliant Estate Planning Tools 4

5 Asia still offers Rich Pickings for Private Banks Some private banks have sold their private banking businesses in Singapore and other parts of Asia to focus on strengthening their foundations back home and in larger markets. This, in-turn, has provided a wealth of opportunities for local private banks, particularly DBS Bank and Bank of Singapore, which have made several acquisitions over the years from those banks that have decided to leave the Asian wealth business. DBS and BOS see Asia as their growth market over the long term. 5

6 Asian Countries GDP General Growth throughout Asia 6

7 Singapore s ties with Vietnam prospering: PM Lee (The Business Times March 22, 2017) Singapore s ambassador to Vietnam, Ms Wong had said that economic cooperation remains very good and Singapore Companies continues to be positive and bullish about the economic prospects. Singapore is now ranked as the third-largest foreign investor in Vietnam (after South Korea and Japan); and within Ho Chi Minh City, Singapore is the top investor. Prime Minister Lee noted that "the potential is great" and he conveyed Singapore's continued interest in expanding its investments in the Vietnamese city. Note: Likewise, Equiom Singapore has seen an increased interest in Vietnamese using Singapore as an additional base for their operations out of Vietnam. 7

8 Jurisdiction Overview : Singapore & Hong Kong Singapore Hong Kong Well Regulated Government and Singapore perceived as being clean and ahead of the regulatory curve not a tax haven but a safe haven Entry point to India Sits between the 2 emerging economies India & China and surrounded by Indonesia/ Malaysia/ Thailand Open Economy and government in support of Free Enterprise Gateway to China Supports HK 9 million population plus surrounded by Taiwan, Philippines and Korean markets Much jurisdictional competition & arbitrage exists between the HK & Singapore 8

9 Similarities : Singapore and Hong Kong PILLARS SINGAPORE HONG KONG Legal Framework Economic & Monetary Policies Geographical Location, Infrastructure and Human Resource Financial Infrastructure English Common Law / Client Confidentiality. Matters which have not been legislated upon by the Singapore Parliament are governed by English Common Law embodied in decided cases of the English courts. Sound economic and monetary governance Strategic location with skilled and educated workforce, good telecommunication Financial services account for 11% of GDP Financial services account for 11.9% of GDP 9

10 Singapore Vs. Hong Kong Political PILLARS SINGAPORE HONG KONG Governing Parliament Financial (Approximately 700+ financial institutions offering full range of Financial, Forex, Trade, Insurance, Asset Management and Investment Services, Advisory and Solutions) Politically stable government for past 50 years. Unicameral parliament and a government patterned after the Westminster model. 5th Largest Regional Foreign Exchange trading Centre after London, New York, Zurich and Tokyo and 3rd Largest Global Financial Centre after London and New York Special Administration Region One country, two systems and a government patterned after England & Wales 6th Largest Regional Foreign Exchange trading Centre 4th Largest Global Financial Centre 10

11 Companies : Singapore and Hong Kong SINGAPORE HONG KONG Shares Corporate Tax (Territorial Tax System) 17% - Foreign sourced income may be exempted from tax. Companies limited by shares 16.5% - Offshore income can be exempted from tax (subject to approval from Inland Revenue Department) Shareholder and Director Company Secretary Annual Filing / AGM Audit Min. 1 shareholder and director. 1 director must be resident individual No Corporate Director allowed Individual resident secretary required. Annual filing of accounts & Annual General Meeting. Audit required when annual revenue or total assets is S$10 million, and 50 members or companies with corporate shareholdings. Min. 1 shareholder and director. Corporate director is allowed (at least one natural person as director). Secretary can either be a individual resident in HK or a company with its registered office in HK. Annual filing of Annual Returns Audit Required 11

12 Brief Summary of CRS and AEOI It s All About The Money Global Forum push for tax transparency and harmonization of the tax framework continues (Tax Revenue) Over 100 major Financial Centres of committed jurisdictions (Excluding USA) have pledged to implement AEOI including Hong Kong, Japan, and within South East Asia, only Singapore, Malaysia and Indonesia have committed Singapore signed over 20 bilateral Competent Authority Agreements mostly north of Singapore, and NONE in S.E. Asia, and will continue to abide by the principles for establishing bilateral AEOI relationships for CRS Note : Vietnam has not committed to CRS and AEOI ( yet) 12

13 Multilateral Competent Authority Agreement (MCAA) The MCAA is a multilateral framework agreement for bilateral cooperation on Automatic Exchange of Financial Information On 22 June 2017, Singapore signed two MCAAs, which reaffirms its commitment to the international standards on tax cooperation : the Automatic Exchange of Financial Account Information under the Common Reporting Standard ("CRS"); and the Exchange of Country-by-Country ("CbC") Reports. Whilst the move signify that Singapore does not need to negotiate bilateral agreements with its trade partners, CRS exchanging parties would still require to submit formal notification to OECD Secretariat before the automatic exchange of information Singapore will also want to ensure that there is a level playing field among all major financial centres. 13

14 Challenges of CRS 26 major challenges identified Common weaknesses S/NO Weakness Remarks 1 Gold Out of scope for reporting of financial assets 2 Property (Real estate) Out of scope for reporting of financial assets 3 25% entity threshold for Controlling Person Relatively easy to split shareholding amongst family members 14

15 CRS / AEOI Considerations and Trends Considerations: CRS and Tax Transparency are only the tip of the iceberg False News, Online Shaming, Public Register of Beneficial Owner, combine with Data Leakage remain Client s Ongoing Concern in terms of Safety and Security Growing Trend: Jurisdictions with Good Cyber and Data Security Governance will be an Added Advantage (e.g. Singapore) Residency Shopping and Jurisdiction Hopping will continue for certain community of tax payers Effective Structure Planning is more important than before 15

16 Tax Compliant Estate Planning Tools Issue Trust PTC Will Foundation Type of document Trust Deed Trust Deed Will Foundation Charter When is it effective? When the asset is transferred to the Trustee When the Trust is set up When the Testator dies When the asset is transferred to the Foundation Contestability Seldom, unless a sham Seldom Issues of undue influence, pressure, incapacity Seldom Resist challenge by Creditors Yes, if it is an irrevocable trust for more than 5 years Yes, if it is an irrevocable trust for more than 5 years No Separate Legal entity Beneficiary Anyone or any organization Must be related to settlor Anyone or organization (except Muslims) Anyone or any organization Court order? None needed None needed Probate None needed Revocable Type of asset Yes, if it is a revocable trust Only those assets specifically transferred into the Trust usually finance assets and properties Yes, if it is a revocable trust Only those assets specifically transferred into the Trust usually finance assets and properties Yes during Testator s lifetime Deals only with the assets of the deceased s estate at the point of death Yes, if it is a revocable foundation Only those assets specifically transferred into the Foundation Effect of Client s death Assets are not frozen Assets are not frozen Assets are frozen Assets are not frozen Effect of marriage No effect No effect Revokes the Will No effect 16

17 Equiom (Guernsey) Limited is licensed by the Guernsey Financial Services Commission. Equiom (Isle of Man) Limited is licensed by the Isle of Man Financial Supervision Commission. Equiom (Jersey) Limited is regulated by the Jersey Financial Services Commission. Equiom (Malta) Limited is authorised to act as a trustee and fiduciary services provider by the Malta Financial Services Authority.