There is a growing need amongst high-net-worth families for institutional management of their private wealth. Family offices address this need, being investment vehicles for structuring the way families invest and transfer their wealth to future generations.
Riding this wave, Singapore has positioned itself as the jurisdiction of choice for family offices in Asia thanks to its position as an international financial hub, a reputation for political and operational stability, and a clear tax and regulatory regime, among other factors.
There are two tax incentive schemes available under the Income Tax Act for family offices in Singapore, where exemption of income applies to:
- income of a company incorporated and resident in Singapore that arises from funds managed by a fund manager in Singapore (previously known as the Section 13R scheme); and
- income arising from funds managed by a fund manager in Singapore (previously known as the Section 13X scheme).
To improve the professionalism of family office professionals in Singapore, and to enhance the positive spill overs to the Singapore economy, the Monetary Authority of Singapore ("MAS") has updated the conditions for the above schemes (now known as the "S13O Scheme" and "S13U Scheme", respectively). These are set out in the "S13O & S13U Application Process for Family Offices – Guidelines for Advisors" ("Guidelines"), which came into effect on 18 April 2022 and incorporate the following changes:
- Updated conditions for eligibility;
- Changes to Annex A, which sets out the information required for preliminary submissions for the Schemes;
- Changes to Annex B, which sets out the supporting documents required; and
- Closing of the interim arrangement in lieu of employment passes ("Interim Arrangement"). In light of the relaxing of travel restrictions, the Interim Arrangement for the S13U Scheme has been closed.
The Guidelines will apply to applications submitted on or after 18 April 2022, with some exceptions.
For more information, click here to read our Legal Update.
