Tax incentive scheme for Singapore Family Offices updated by MAS

Stricter criteria for Family Offices in Singapore to receive tax incentive come into force from April 18, 2022

The Monetary Authority of Singapore (MAS) have amended the tax incentive scheme enjoyed by Family Offices. The new conditions apply to section S13O and Section 13U of the Income Tax Act of 1947.

The new criteria are designed to increase the standards and professionalism of the sector, encourage local hiring and drive investments in local businesses, start-ups and other assets.

Key changes to the S13O scheme include:

  • Local investments – the fund must invest a minimum of S$10 million or at least 10% of its AuM (whichever is lower) locally. Investments could include equities on the SGX, PE investments in Singapore start-ups, Singapore-registered or licensed fund managers, qualifying debt securities. At time of application, the fund will have a one-year period to make such investments if they haven’t already done so
  • Assets Under Management (AuM) – the minimum AuM for Family Offices has been updated to S$10 million upon application. Within two years the fund must have increased to S$20 million in AuM
  • Spending – total business expenditures must now be a minimum of S$200,000 per year, according to a tiered framework
  • Hiring – under the updated S130 scheme, Family Offices now need to hire at least two investment professionals (portfolio managers, traders, research analysts). Upon application, should the office not have two professionals they will have one year to hire a second. Minimum salaries should be S$3,500 per month and the candidates should have significant experience in the sector

Key changes to the S13U scheme include:

  • Hiring – the fund must either be advised by or managed by a minimum of three investment professionals with at least one being a non-family member. The fund is given one year upon application to meet this criteria
  • Spending – total business expenditures must now be a minimum of S$500,000 per year, according to a tiered framework. These expenses are for operating requirements, not financing activities
  • Local investments – the fund must invest a minimum of S$10 million or at least 10% of its AuM (whichever is lower) locally

For more information, please contact Alpadis Group.