The Monetary Authority of Singapore (MAS) announced new stricter criteria for family offices to receive tax incentives in Singapore. The new rules apply as of April 18, 2022.
The updated conditions apply to Section 13O and Section 13U of the Income Tax Act of 1947, which includes increasing the minimum assets under the management of the family office, hiring investment professionals, and mandatory spending on local investments, among others.
For family offices registering under the S13O scheme – locally incorporated structures – the minimum fund size is now at S$10 million (US$7.3 million), at the point of application. Further, the fund must increase its assets under management (AUM) to S$20 million (US$14.6 million) within two years.
Family offices under the S13O scheme must now hire at least two investment professionals (IP). In the event the family office is unable to hire two IPs by the point of application, they will be given one year to hire the second IP.
An investment professional includes:
Previously, the S13O scheme only required the fund to be managed or advised by a fund management company (FMC) in Singapore where the FMC is licensed under the Securities and Futures Act 2001.
The fund managed by the family office must invest at least 10 percent of its AUM or S$10 million (US$7.3 million) — whichever is lower — in local investments. Products may include:
If the fund is unable to invest in local investments by the time of application, it will be given a one-year grace period to do so.
Family offices under the S13O scheme must incur a minimum total business expenditure of S$200,000 (US$146,000) per year. This is governed by a tiered framework based on the value of the AUM.
This article was first published by AseanBriefing which is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia from offices across the world, including in in China, Hong Kong, Vietnam, Singapore, India, and Russia. Readers may write to [email protected].
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