WeDigest > Family Office > Singapore Family Office Update 2022: Tax Incentive
The family office landscape in Singapore has continued to flourish and expand with promising potential since our last publication “Singapore as an ideal location for a family office” in 2020. With updated guidelines and criteria for the tax incentive scheme, it is therefore timely for us to revisit this topic to navigate the considerations of setting up a family office in Singapore.
The government continues to implement tax incentives to promote the growth of the family office industry and fund flows into Singapore. The section 13O (previously known as 13R) and 13U (previously known as 13X) provide tax exemption on “specified income” derived from “designed investments”. The Monetary Authority of Singapore (MAS) has amended the requirements of section 13O and 13U effective 18th April 2022.
| 13O - Singapore Resident Fund Scheme | 13U - Enhanced-Tier Fund Tax Exemption Scheme | |
|---|---|---|
|
Fund’s legal form |
Company incorporated in Singapore |
Company, trust and limited partnership |
|
Fund’s residence |
Singapore |
No restrictions |
|
Fund manager |
Singapore-based and holding CMS license, unless exempted |
Singapore-based and holding CMS license, unless exempted |
|
Asset under Management (AUM) |
• Point of application: S$10M • Commit to increasing AUM to S$20M within 2 years |
Point of applicationL S$50M |
|
Staffing requirement of Investment Professionals (IPs) |
• Minimum of two IPs • May be given 1-year grace period to employ the second IP |
• At least three IPs with one being a non-family member • May be given 1-year grace period for non-family member IP |
|
TIERED BUSINESS SPENDING FRAMEWORK |
||
|
AUM Tier |
Minimum total business spending (per year) |
Minimum local business spending (per year) |
|
AUM < S$50M |
S$200,000 |
S$500,000 |
|
S$50M ≤ AUM < S$100M |
S$500,000 |
S$500,000 |
|
AUM ≥ S$100M |
S$1M |
S$1M |
|
Local investments* |
• Comprise at least 10% of the fund’s AUM or S$10M, whichever is lower at any one point in time • May be given 1-year grace period |
|
* Local investment products include: i) equities listed on Singapore-licensed exchanges, ii) qualifying debt securities, iii) funds distributed by Singapore licensed/registered fund managers, iv) private equity investments into non-listed Singapore-incorporated companies (e.g., start-ups) with operating business(es) in Singapore.
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