MAS to adjust tax incentives to encourage single family offices to invest ‘more purposefully’ in Singapore

SINGAPORE: The Monetary Authority of Singapore (MAS) announced on Wednesday (Jul 5) adjustments to its tax incentives for single family offices, such as recognizing wider investments in Singapore as well as overseas that climate-related investments.

These changes hope to encourage single-family offices to deploy capital “more purposefully to benefit Singapore and the region” and increase contributions to environmental and social causes, said the MAS chief Ravi Menon at a press conference for the central bank’s annual report.

Family offices are private organizations established to manage the wealth of one or more families.

A family office does not need to be registered or licensed by MAS because they do not manage third party funds. The number of such entities that have been given tax incentives by MAS has increased to 1,100 by the end of 2022, from 700 in 2021, Menon said.

To encourage single-family offices to invest more in Singapore, MAS has expanded the scope of tax incentives to recognize all investments in unlisted companies in Singapore, including private credit.

It recognizes double the amount invested in Singapore-listed equities, qualified exchange-traded funds and unlisted funds that primarily invest in Singapore-listed equities.

Single-family offices must also have at least one non-family member of the investment professionals it hires.

In addition, all new SFO applicants must meet the business expenditure requirement with expenditure from Singapore only, unlike before where expenditure abroad counted towards meeting the requirement.

The new changes will expand the pool of available jobs for Singaporean professionals, as well as channel more benefits to businesses and service providers based in Singapore, said Mr Menon. .

In dealing with climate change, MAS will expand the range of eligible investments to cover mixed financial structures and recognize climate-related investments overseas, not just in Singapore.

“Climate change is a global problem that is not limited to national borders,” said Mr Menon.

“As a low-lying island state, Singapore is particularly vulnerable to climate change. So we must acknowledge all efforts made to address climate change issues.