Singapore MAS Family Offices Schemes Updated

Singapore MAS Family Offices Schemes Updated

SINGAPORE HAS EARNED A REPUTATION AS A DESIRABLE DESTINATION FOR HIGH-NET-WORTH FAMILIES LOOKING TO PROFESSIONALISE THEIR MONEY MANAGEMENT.

The Monetary Authority of Singapore (MAS) recently strengthened the standards for family offices and their funds to qualify for tax exemptions under Income Tax Act (ITA) sections 13O and 13U. The new requirements are intended to increase fund size, sharpen fund manager skills, and increase investments in the local economy. What does this have to do with you? In this essay, we will summarise and explain the changes to MAS’ tax incentive for single family offices (SFOs).

I am text block. Click edit button to change this text. Lorem ipsum dolor sit amet, consectetur adipiscing elit. Ut elit tellus, luctus nec ullamcorper mattis, pulvinar dapibus leo.

Modifications to the Incentive Requirements for Funds Under Section 13O

Investment vehicles with Singaporean incorporation are funds under 13O.

1.) Section 13O requires funds to have a minimum of S$10 million under management at the time of application and agree to increase it to S$20 million in two years. Previously, a minimum AUM only applied to section 13U funds.

2.) The number of investment professionals (“IPs”) required in a family office has increased from one to two. If there are valid reasons preventing you from using the second IP immediately, the MAS may grant you a one-year grace period.

3.) Previously, regardless of the size of the fund, the minimum business spend was S$200,000 per year. With funds less than S$50M, the new criteria require a minimum annual spend of S$200,000. When the fund size is greater than S$50M but less than S$100M, a minimum of S$500,000 in annual business spending is required. When the fund size exceeds S$100 million, the required business spending rises to S$1 million per year.

CHANGES TO INCENTIVE REQUIREMENTS FOR FUNDS UNDER SECTION 13U

13U funds are fund vehicles that can be established and managed in Singapore or elsewhere.

1.) The number of IPs required for section 13U funds has been reduced by the MAS. The new rules require that at least one of the three IPs be a non-family member. There may be a grace period before you have to hire this person.

2.) The new minimum required business spending in Singapore is S$500,000 per year for funds up to S$100 million. Similar to 13O fund vehicles, any funds larger than S$100M are required to spend at least S$1M.

3.) Previously, section 13O and 13U funds were exempt from any geographic restrictions. The new regulations, however, require them to have at least 10% of the fund’s AUM or S$10 million (whichever is less) invested in Singapore-based investments at any given time (including during the application process).

The geographical requirement is satisfied by the following investments: (i) equities traded on Singapore-licensed exchanges; (ii) qualifying debt securities; (iii) funds provided by Singapore-licensed/registered fund managers; and (iv) private equity investments in non-listed Singapore-incorporated firms, such as start-ups.

For the whole of 2021, prices shot up 10.6 per cent from a 2.2 per cent gain in 2020, according to data from the Urban Redevelopment Authority (URA) on Friday (Jan 28). The figures are unchanged from URA’s flash estimates released on 3rd January 2022. Before accelerating in the fourth quarter, private home prices grew 1.1 per cent in the third quarter, a 0.8 per cent rise in the second quarter and 3.3 per cent in the first. Prices of private residential properties island wide clocked their seventh straight quarterly growth, rising 5 per cent in the fourth quarter of last year, as economic recovery and robust demand bucked ongoing tightened pandemic-related measures.

High-net-worth families who want to professionalise their money management have come to see Singapore as a desirable location. For funds managed by MAS-licensed fund managers located in Singapore, The Lion City provides tax exemptions. Funds managed by fund managers who are exempt from the regulations are also covered by these exceptions. Family office managers are one type of example.

According to the MAS, its policies, guidelines, and reward structures should align with the objectives and aspirations of family offices. The statement reads, “We aim to raise the professionalism of family office professionals in Singapore and enhance the positive spillovers to the Singapore economy as the family office eco-system grows and matures.”

After April 18, 2022, all new family office applications submitted to the MAS will be governed by the updated criteria. Applications that were submitted earlier won’t probably be impacted. Furthermore, funds advised or managed by a Singaporean licenced fund manager are not covered by the changes.

Trustmoore has been in the business of providing Multi-Family Office (MFO) services for over 17 years. We understand that each family office setup is unique, which is why our customised solutions are designed to meet your specific requirements.
We are truly independent advisers because we are not affiliated with any bank, lawyer, or accounting firm. We can focus solely on setting up and running your family office in Singapore and advising you on personal wealth management.
Contact Desley Tan to learn more about our services and how we can assist you.