Overview of Family Offices in Singapore
We published a newsletter regarding family offices in Singapore. To view the PDF version, please click the following link.
→Singapore: Overview of Family Offices
Singapore: Overview of Family Offices
December 2021
In Singapore, there has been an increase in the number of Family Offices established to manage the affairs of wealthy families in recent years.
This article provides an overview of family offices and how to establish it in Singapore.
1. Overview of Family Offices
A family office is generally a company that provides a number of services for a wealthy family such as asset management. The Monetary Authority of Singapore (“MAS”) defines a single-family office (“SFO”) as “an entity which manages assets for or on behalf of only one family and is wholly owned or controlled by members of the same family”[1]. In addition to SFO, there are other types of companies, such as a multi-family office which manages the assets of several families.
Managing your assets through a family office is a safe way to manage your assets for the benefit of your family and to leave the assets to your descendants. Also, there are tax advantages available in some countries making a family office an effective way to save on taxes.
Global examples of family offices include Cascade Investment, founded by Bill Gates in Washington State, USA, and Bezos Expeditions, founded by Jeff Bezos, the founder of Amazon.com.
2. Family Offices in Singapore
In recent years, there has been an increase in the number of family offices established in Singapore[2]. In 2020, 400 family offices were established[3]. The reason for this increase is not only the political and economic stability of Singapore but also the existence of the Family Office Development Team (“FODT”), established jointly by MAS and the Singapore Economic Development Board (“EDB”) to strengthen Singapore’s competitiveness as an international asset management and family office hub, and tax incentives.
In Singapore, “Sassoon Investment Corporation”[4]” founded by Victor Sassoon, the Executive Chairman of the Rubina Watch Company, and “Rumah Group”[5] established by Stanley Tan, the Executive Director and Chief Executive Officer of Global Yellow Pages Ltd, conduct asset management and investment activities.
(1) Obligation to obtain a licence to establish an SFO
In Singapore, it is possible to establish an SFO for a single family to manage its assets under the Securities and Futures Act[6] (“SFA”) and the Financial Advisers Act[7] (“FAA”).
In particular, in relation to the SFA, an SFO may fall under the category of “fund management”[8] and may be required to obtain a Capital Markets Services License[9] or an exemption[10][11] from such requirement.
Also, in relation to the FAA, SFO may be fall under “Financial Adviser”[12] and required to obtain a “Financial Adviser’s License”[13]. However, as a company which only advises associated companies is exempted from the requirement to obtain the license[14], an SFO may be exempted from the requirement[15].
(2) Taxation in relation to SFO
One of the advantages of establishing an SFO in Singapore is the tax exemption scheme. There are mainly 3 schemes as below.
①13CA (Offshore Fund Scheme) ②13R (Resident Fund Scheme) ③13X (Enhanced Fund Scheme)
Each scheme havs different eligibility and exemption as below.
① 13CA (Offshore Fund Scheme) Baes law: Section 13CA of the Income Tax Act (“ITA”)[16] Eligibility: Residents outside Singapore with a fund structure of company, trust company or individual Tax exemption: Specified income from the Designated investments[17] Income tax return: Not required VCC[18]: No The scheme is available to families residing outside Singapore. However, there are a number of restrictions including restrictions on the fund structure and the inability to use VCC.
② 13R (Resident Fund Scheme) Base law: Article 13R of ITA[19] Eligibility: Tax resident in Singapore with a fund structure of (domestic) company Tax exemption: Specified income from the Designated investments17 Income tax return: Required Business expenses: S$200,000 annually VCC: Yes Although it is required to be a resident in Singapore, this scheme is more flexible than the 13CA scheme.
③ 13X (Enhanced Fund Scheme) Base law: Article 3X of ITA[20] Eligibility: No restriction on the place of residence and fund structure Tax exemption: Specified income from the Designated investments17 Income tax return: required VCC: Yes Business expenses: S$200,000 + annually Fund requirement: S$50,000,000 at the time of application Although there is no residency requirement and the scheme is highly versatile, there are several hurdles to cross such as funding requirements.
[1] “an entity which manages assets for or on behalf of only one family and is wholly owned or controlled by members of the same family” (Q18) (https://www.mas.gov.sg/-/media/MAS/Regulations-and-Financial-Stability/Regulations-Guidance-and-Licensing/Securities-Futures-and-Fund-Management/Regulations-Guidance-and-Licensing/FAQs/SFA–FAQs-on-the-Licensing-and-Registration-of-Fund-Management-Companies—6-Apr-2020.pdf )
[2] https://www.mas.gov.sg/development/wealth-management
[3] https://www.edb.gov.sg/en/our-industries/family-office.html
[4] https://www.sasscorp.com.sg/
[5] https://www.rumahgroup.com/
[6] https://sso.agc.gov.sg/Act/SFA2001
[7] https://sso.agc.gov.sg/Act/FAA2001
[8] SFA Article 2(1), and SFA, Second Schedule, Part II (“Fund management”) (https://sso.agc.gov.sg/Act/SFA2001?Timeline=Off&ProvIds=Sc2-#Sc2-)
[9] SFA Article 82 (https://sso.agc.gov.sg/Act/SFA2001?ProvIds=P1IV-#pr82-)
[10] Securities and Futures (Licensing and Conduct of Business) Regulations, SECOND SCHEDULE (EXEMPTIONS FROM SECTIONS 82(1) AND 99B(1) OF ACT) (https://sso.agc.gov.sg/SL/SFA2001-RG10?ProvIds=Sc2-#Sc2-) 5(1)(b)
[11] FAA Section 99(1)(h) (https://sso.agc.gov.sg/Act/SFA2001?ProvIds=P1IV-#pr99-)
[12] FAA Clause 2(1) (https://sso.agc.gov.sg/Act/FAA2001#Sc2-)
[13] FAA clause 6(1) (https://sso.agc.gov.sg/Act/FAA2001?ProvIds=P1II-#pr6-)
[14] Financial Advisers Regulations 27(1)(b) (https://sso.agc.gov.sg/SL/FAA2001-RG2?ProvIds=P1VI-#pr27-)
[15] Q16 “An SFO that provides financial advisory services to its related corporations may rely on an existing exemption from licensing under regulation 27(1)(b) of the Financial Advisers Regulations.”(https://www.mas.gov.sg/-/media/MAS/Regulations-and-Financial-Stability/Regulations-Guidance-and-Licensing/Securities-Futures-and-Fund-Management/IID-FAQs/FAQsFMCLicensingAndRegistration_17Sep2018.pdf?la=en&hash=E50ACDA662993CC9D40EB71BD7389C4AADAAFAA1)
[16] https://sso.agc.gov.sg/Act/ITA1947?ProvIds=P1IV-#pr13CA-
[17] Income Tax (Exemption of Income of Prescribed Persons Arising from Funds Managed by Fund Manager in Singapore) Regulations 2010 (https://sso.agc.gov.sg/SL/ITA1947-S6-2010?DocDate=20120720&ProvIds=Sc3-#Sc3-)
[18] A variable capital company under the Variable Capital Companies Act (https://sso.agc.gov.sg/Act/VCCA2018) (“Singapore Variable Capital Company”)
[19] https://sso.agc.gov.sg/Act/ITA1947?ProvIds=P1IV-#pr13R-
[20] https://sso.agc.gov.sg/Act/ITA1947?ProvIds=P1IV-#pr13X-
