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Singapore tax break a “unique opportunity” – major MFO
Singapore’s new tax incentive scheme for philanthropic donations has been lauded for its “immense potential” to attract further UHNWI capital to the Southeast Asian city-state, by Raffles Family Office, a major multi-family office which operates in Singapore and Hong Kong.
By Daniel Shane | Feb 15, 2023
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In order to qualify for the scheme, donors need to operate a family office under the Monetary Authority of Singapore’s (MAS) 13O or 13U schemes, as well as meet other conditions such as incremental business spending of SG$200,000 (US$150,000). The existing 13O and 13U programmes provide tax incentives for family offices in Singapore that meet certain requirements on AUM and business spending.
Aside from a stipulation that tax deductions on philanthropic donations will be capped at 40% of the donor’s statutory income, few other details were provided on the new scheme, which was included as an annex to this year’s budget. The MAS is set to provide further details on the proposals on 31June 2023.
“This incentive will be instrumental in driving philanthropic activities in the country, further enhancing Singapore’s reputation as a top–tier wealth management centre and a regional philanthropy hub,” commented Kendrick Lee, managing partner and co-founder of Raffles Family Office.
“Many of our UHNW clients are global citizens who are passionate about making a positive impact in their communities and beyond. They express a strong desire to support various causes, reflecting their global outlook and their commitment to social responsibility. We believe that the proposed tax incentive presents a unique opportunity for our clients to amplify the impact of their philanthropic activities both locally and globally,” Lee added.
The move is the latest by the Singapore government to try to burnish the city’s status as a family office hub for UHNWIs from regions including Southeast Asia, Greater China and beyond.
Other initiatives include introducing the Variable Capital Company (VCC) structure and launching the Global Asia Family Office Circle, which allows industry players to collaborate, share best practices and build new capabilities. According to Singapore’s Economic Development Board, there were about 700 family offices in the city as of the end of 2021.
Hong Kong has also sought to promote its credentials as a family office hub, with incentives including tax concessions. However, the city’s efforts to do so have coincided with nearly three years of strict COVID-19 restrictions and the de facto closure of its border with mainland China, with many of these curbs only recently removed. The Hong Kong government does not provide data on family offices operating in
“This tax incentive scheme has immense potential to augment Singapore’s goal and attract more capital over time,” said Raffles’ Lee, of the Lion City’s proposal. “We are anticipating more details about the incentive’s mechanism and implementation.”