Tax perks to encourage single family offices (SFO) to invest in Singapore

THE Monetary Authority of Singapore (MAS) is expanding its scope of tax incentives for single family offices (SFOs) in Singapore to encourage them to deploy capital in the country more purposefully for its benefit, and increase contributions towards environmental and social causes.

The changes include broadening tax incentive coverage to blended finance structures, and recognising overseas climate-related investments as well as investments in Singapore.

To encourage deeper investments into Singapore, MAS is expanding the scope of tax incentives to recognise all investments in non-listed Singapore operating companies, including private credit. It will recognise twice the amount invested in Singapore-listed equities and in eligible exchange-traded funds and unlisted funds which invest primarily in Singapore-listed equities, for the purpose of meeting SFOs’ investment requirements.

SFOs will now be required to have at least one non-family member as one of the investment professionals it needs to hire. This will expand the pool of available jobs for professionals in Singapore.

All new SFO applicants will have to meet their business spending requirement solely from Singapore, as opposed to previously, where overseas spending counted towards meeting the requirement.

Philanthropy tax incentive scheme (PTIS) for family offices. The scheme, announced in Budget 2023, will go live on Jan 1, 2024. It will allow qualifying donors in Singapore to claim 100 per cent tax deductions for overseas donations made through qualifying local intermediaries. The tax deduction is, however, capped at 40 per cent of the donor’s statutory income.

As at end-2022, Singapore had 1,100 SFOs which were awarded tax incentives by MAS. This is an increase from the 700 recorded a year earlier, and from the 400 SFOs as at end-2020. These family offices collectively managed about S$90 billion worth of assets as at 2021, less than 2 per cent of the S$5.4 trillion total assets managed in Singapore.

Original article: https://www.businesstimes.com.sg/singapore/mas-broadens-tax-perks-encourage-single-family-offices-invest-singapore