Tax Policy Regimes, High Net-Worth Individuals and Enterprise Development: A Comparative Study of Singapore, Hong Kong and Malaysia

Abstract

HNWIs are often illustrated as a niche segment of opulent people who are highly secretive while possessing huge tax contribution potential. Countries across the globe have been competing intensely to court the rich into their respective territories, eyeing for the potential tax revenue and massive investment inflows. Asian cities, particularly Singapore and Hong Kong have received great HNWIs’ inflows over the recent years motivated by their HNWIs-dedicated capital-friendly tax policies. Despite being crowned as the global leading Islamic financial centre, an evident gap still persists for Malaysia when compared against Singapore and Hong Kong in drawing HNWIs’ investments and inflows with increasing HNWIs’ outflows reported recently. This study then synthesised and compared the rates of HNWIs-concerned taxes and relevant incentives implemented in the mentioned jurisdiction, while analysing Malaysia’s comparative attractiveness towards HNWIs against reputable wealth hubs. Apparently, tax rates and incentives in Malaysia are relatively trailed behind and less appealing compared to the studied counterparts. Moreover, the absence of targeted policies for HNWIs in Malaysia may impede the development of high-value enterprises that often accompany HNWI inflows. Preferential tax incentives for HNWIs-related such as family offices are also absent in Malaysia. Results from this study are also perceived to bridge the knowledge gap while providing new evidence regarding comparative studies on cross-regional tax regimes, given limited literature emphasizing the similar method and evidence was available when the study is conducted. Ultimately, understanding the relationship between tax policy and HNWI behaviour can serve as a crucial lever for enterprise development and economic growth in Malaysia. Findings from the study could also contribute valuable insights to policymakers and related institutions in strategizing relevant initiatives to allure more HNWIs into Malaysia.