MAS to change the tax incentives for Single Family Offices to boost local hiring and investments in equity markets
Singapore’s Monetary Authority (MAS) plans to adjust its tax incentives for single-family offices, aiming to stimulate local employment and encourage investment in domestic equity markets. The proposed revisions also involve incentives to drive investment in climate-related projects and promote philanthropy within the country.
Family offices, established by wealthy individuals to manage their financial affairs and investments, currently benefit from tax exemptions on a variety of investments in Singapore. This policy has led to an increase in single-family offices located in the city-state, growing from 400 at the end of 2020 to 1,100 in 2022.
Despite this increase in family offices boosting overall assets under management, the wealth largely has not been invested domestically, meaning there hasn’t been a significant rise in local job opportunities. The proposed measures aim to address this.
Single-family offices seeking 13O and 13U tax exemptions will need to meet minimum asset under management and business spending requirements. Key changes to the tax structure include:
- Encouraging participation in blended finance structures that support the region’s transition to net zero. For grants that offices provide to support such structures without expectations of income or return of principal, authorities will recognize S$2 ($1.48) for every dollar spent.
- All investments in non-listed Singapore operating companies will be recognized.
- Twice the amount invested in Singapore-listed equities, eligible exchange traded funds, and unlisted funds investing primarily in locally listed equities will be recognized.
The MAS also plans to increase surveillance and protection against money laundering risks in this sector. They will require all single-family offices to notify the regulator when they start operations and to maintain a business relationship with a MAS-regulated financial institution. A public consultation on these proposals will be launched soon.
In addition to that, the philanthropy tax incentive scheme (PTIS) will be launched to encourage single-family offices to engage in philanthropic activities both locally and overseas.
These adjustments to tax incentives are part of Singapore’s efforts to ensure wealth plays a more active role in its economy and society. As the city-state continues to attract global wealth, the proposed changes reflect a more focused approach on local benefits, maintaining Singapore’s reputation as a significant hub for global wealth management.
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