For many family businesses, sustaining prosperity for the long run depends on how well they plan transfers of business assets and family wealth from one generation to the next.
Beyond the emotional concerns these transfers entail, tax, legal and a host of other issues come into play. Today, these issues are multiplying as the pandemic lingers, geopolitical tensions run high, recession looms, and technology opens opportunities for new business models and ways of doing business.
Taxing family business transfers: a world of differences
In this report, KPMG Private Enterprise advisers offer a snapshot of the domestic tax rules governing family business transfers and provide a detailed analysis of the outcomes of two case studies in which the shares in a family business are transferred on the owner’s death (inheritance) and in which the transfer happens during the owner’s lifetime (gifting).
With more business families globalising, family members more globally mobile, and assets being diversified geographically, it’s imperative that family businesses consider the tax implications, as well as business and personal factors when planning a family business transfer.
View our interactive analysis and compare tax implications across 57 jurisdictions worldwide.
Click on the map below.
Domestic tax rules are only one factor helping to drive succession, investment and business planning. For broader context, this year’s report surveys the lay of the land for today’s business families, with insights on some of their biggest risks and priorities distilled from interviews with KPMG Private Enterprise leaders and advisers in selected countries, territories and jurisdictions.
Top global trends influencing business family planning
Global family business tax monitor 2023 gathers insights from KPMG Private Enterprise advisers worldwide, highlighting three emerging trends that business families should consider as they develop their long-term plans for their businesses and their wealth.
- KPMG Private Enterprise advisers say more of their business family clients are globalising, with members more globally mobile, assets being diversified geographically, and businesses transitioning to greener models.
This is resulting in their spread over more jurisdictions, with the potential for tax, legal and other risks to multiply.
As the pandemic lingers in some jurisdictions, these risks are especially heightened for wealthy families. Governments are now looking to them as a potential source of much-needed revenue to restore finances depleted by emergency relief efforts.
The tax landscape is always changing — creating both opportunity and risk — so business families with footprints in multiple jurisdictions are advised to monitor potential new or increased taxes and consider taking action in advance.
KPMG Private Enterprise advisers are seeing increased rigour in the management of family wealth in many jurisdictions, with more reliance on family offices and more focus on governance.
As new generations are brought in, the focus is turning from running the founding generation's business to managing investments and capital for the long term.
Using a family office to manage the complexity of the family’s wealth is especially valuable for globalising families as their members and assets spread across multiple jurisdictions, creating more cross-border risks.
The family office structure is crucial for supporting objectives, providing specialised advice for all family members and viewing their wealth management holistically to avoid blind spots. This gains importance from one generation to the next as the family's holdings increase and diversify.
In Singapore
Singapore has been the traditional hub for Chinese business family offices, with a skilled pool of professionals helping these families invest and set up business outside of China as they map the family’s future. More recently, Chinese families are setting up offices in other countries, territories and jurisdictions, including the US and Canada.
Business families have always played a philanthropic role, but the sharpening focus on transparency and ESG reporting has compelled many to be more public about their contributions.
Families are redefining the purpose of wealth beyond capital, mirroring the change in attitudes in the corporate world with regard to social obligations beyond its shareholders.
In addition to traditional benevolent activities, many business families are seeking business models that earn financial profits while helping their communities prosper more broadly.
Business families often coordinate their philanthropic work through a form of family foundation, with operations dedicated to evaluating investment opportunities and determining how to deploy capital for various philanthropic endeavours.
Depending on the jurisdiction, other structures such as donor-advised funds could be used to achieve the family’s objectives more cost-effectively.
Summary notes: Singapore
Minimal tax due
- Singapore has no inheritance or gift tax.
- There should be no personal income tax implications for the child as the gain arising from the inheritance should arguably be treated as capital in nature and not taxable (as capital gains are not taxable in Singapore).
- Stamp duty may arise on the transfer of shares in a Singapore company by gift, based on 0.2% of the transfer consideration or value of the shares — whichever is higher. Where the company holds immovable property, that property’s market value is used instead of book value when determining the value of the shares.
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