For several decades, companies have been competing globally to hire the most talented workers. As a result of COVID-19 and lockdowns, this global competition has now extended to skilled and trade workers. How can immigration practitioners help their clients gain an edge and manage staffing shortages?
Leon Kwong Wing examines the key points for Singapore. The following is based on his Singapore paper for the 2022 AILA/GMS Annual Global Migration Forum.
Global Investor Programme (GIP)
The GIP offers Singapore permanent resident status for ultra-high net-worth people and owners of large businesses.
The GIP is administered by the Economic Development Board, which is the government agency for promoting foreign direct investment in Singapore. The EDB division administering the GIP is Contact Singapore, whose mission is to draw entrepreneurs and busines owners to relocate to and invest in Singapore.
The GIP is open to four categories of people:
a) ‘Established business owners’ of three or more years’ entrepreneurial and business standing, running businesses with revenues of SGD200 million (about USD150 million) a year in the last three years, in any one of a (wide) list of specified industries. The applicant should be owner of at least 30 per cent of the business if it is privately-held; or among the largest individual shareholders if publicly-listed.
b) ‘Next-generation business owners’ who are board directors or C-suite executives of businesses with revenues of SGD500 million (about USD370 million) a year in the last three years, in any one of the same (wide) list of specified industries. The applicant’s immediate family must own at least 30 per cent of the business or be its largest shareholder.
c) ‘Founders of fast-growth companies’ in the specified industries. The applicant must still be a major individual shareholder in business. The business has to have a valuation of SGD500 million, and reputable venture capital or private equity investors.
d) ‘Family office principals’ who have five years’ entrepreneurial, investment or management experience, and who have net assets (excluding real estate) of SGD200 million.
The investment is SGD2.5 million:
a) as share capital in a new business or as additional share capital to expand an existing business in Singapore (‘Option A’);
b) in a (small) number of third-party investment funds approved by the EDB for the GIP (‘Option B’); or
c) as share capital in a single-family office which will manage SGD200 million in assets (‘Option C’).
Contact Singapore takes nine to 12 months to process a GIP application. The application fee payable to the agency is SGD10,000.
a) Before that can happen, it takes a fair amount of time and effort on the part of the client and the law firm to prepare an application for submission In the case of Option A, a GIP application requires, among other things, the applicant to draw up a five-year business plan with their projections for:
(i) the number of jobs to be created for Singapore citizens, Singapore permanent residents and foreigners at every level of the organisation and business;
(ii) fixed investments in building, equipment and machinery;
(iii) revenues; and
(iv) business expenditure within and outside Singapore.
The applicant is expected to be involved in the business as a board director and/or a C-suite executive, and his/her role in executing the business plan has also to be elaborated in the application.
b) An Option C application will likewise require a five-year plan describing the intended investment strategy, asset allocation, functions and in-house capabilities of the single-family office. The GIP applicant would be expected personally to figure in a major investment role in the family office’s business plan.
c) Option B may be in the nature of a passive investment in a third-party fund. Even so, Contact Singapore will solicit the applicant’s intentions (if any) in relation to carrying on a business in Singapore and the possible size of the business investment and number of jobs that might be created. Even with Option B applicants, being established entrepreneurs, business owners and/or ultra-high net-worth people, are assessed on the basis of any business or investment plans that they would be minded to pursue when they have obtained permanent resident status; and not on their purely passive monetary investment in the fund.
Singapore permanent resident status can be obtained for the GIP applicant’s spouse and unmarried children under 21 years in the one application. The applicant may also sponsor ‘long-term visit passes’ for his/her parents and unmarried children over 21 years to reside in Singapore.
Family offices are fund management companies. And fund management companies in principle constitute taxable permanent establishments for the fund entities whose capital and investments they manage.
a) With that said, any offshore fund entity managed by a fund management company in Singapore is explicitly exempt from tax in Singapore on most kinds of investment.
b) The point of making offshore fund entities tax-exempt is precisely to encourage these funds to be managed in and from Singapore rather than someplace else.
c) Of course, fund management is a regulated activity. Which means that the fund management company has either to be licensed or exempt from licensing. Family offices will usually be exempt from licensing on the ground that they only manage funds for related corporations.
d) A family office can also manage onshore (meaning Singapore-resident) fund entities. Onshore fund entities can also be exempt from tax in Singapore on same investments as offshore funds, merely that the exemption is not automatic (as with offshore funds) and has to be applied for.
e) The exemption for onshore funds is relevant to Option C under the Global Investor Programme. As I mentioned above, Option C involves setting up a family office that will manage investments SGD200 million (about USD150 million) or more. There is further requirement that SGD50 million (about USD37.5 million) of the investments be held onshore (meaning in or through Singapore).
The investment period is five years. That is to say, the investor under Option A or C has to provide the EDB with the audited financial statements and payroll of the business or family office at the end of five years as evidence that the business plan was carried through. Option B investors will be free to withdraw their fund investments, should they choose to, after five years.
The Tech.Pass is a two-year work pass for entrepreneurs, leaders and experts in ‘tech’.
The pass is administered by the Economic Development Board and intended by the agency to attract tech talent and develop the tech ‘ecosystem’ in Singapore. For the EDB, ‘tech’ encompasses digital, medtech, biotech, cleantech, agritech and fintech.
A person has to meet two out of the following three criteria to apply for a Tech.Pass:
a) have an income of SGD240,000 (about USD180,000) a year, or a fixed salary of SGD20,000 (about USD15,000) a month;
b) at least five years’ experience in leading roles in tech companies with USD30 million in funding, or a USD500 million valuation or market capitalisation; and
c) at least five years’ experience in leading roles developing tech products having USD100 million annual revenues, or 100,000 monthly active users.
The Tech.Pass holder is expected to engage in some combination of the following: