MAS to adjust tax incentives to encourage single family offices to invest 'more purposefully' in Singapore
In Singapore, the Monetary Authority (MAS) revealed changes to its tax benefits for single family offices. These adjustments include expanding the types of investments that qualify in Singapore and allowing for climate-related investments overseas.
These modifications aim to motivate individual family offices to invest funds in a way that is more meaningful and beneficial for Singapore and its neighboring areas. MAS leader, Ravi Menon, mentioned during a media briefing about the central bank's yearly report that this will also lead to an augmentation in support for environmental and social initiatives.
Family offices are exclusive establishments established to oversee the finances of a single or multiple households.
A private office for one family does not need to go through registration or acquire a license from the Monetary Authority of Singapore (MAS) since they do not handle funds from outside parties. According to Mr. Menon, the MAS has granted tax benefits to around 1,100 of these organizations by the end of 2022, which is an increase from 700 in 2021.
In order to motivate single family offices to increase their investments in Singapore, the Monetary Authority of Singapore (MAS) is broadening the range of tax benefits to acknowledge all investments made in privately owned Singapore operating firms, such as private credit ventures.
The system will acknowledge and validate an investment that is twice the initial amount put into equities listed in Singapore, as well as eligible exchange-traded funds and unlisted funds that primarily invest in equities listed in Singapore.
Single family offices must employ at least one investment professional who is not a family member.
Furthermore, every fresh applicant applying for SFO will now be obliged to fulfill the business spending condition exclusively with expenditures made within Singapore. This is a change from the previous policy where spending made overseas was also accepted towards meeting the requirement.
According to Mr. Menon, the upcoming modifications will broaden the range of employment opportunities accessible to professionals in Singapore, while also ensuring that local businesses and service providers in Singapore can enjoy more significant advantages.
When it comes to addressing climate change, MAS intends to expand the range of suitable investments to encompass blended finance arrangements and acknowledge climate-related investments abroad, in addition to those within Singapore.
"Addressing the issue of climate change, Mr. Menon emphasized its worldwide impact, unrestricted by the boundaries of any single nation."
Being a small island nation situated close to sea level, Singapore is highly susceptible to the adverse effects of climate change. Therefore, it is imperative that we acknowledge and appreciate any endeavors undertaken to tackle the pressing concerns related to climate change.
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The MAS also unveiled the charity tax incentive program (CTIP) to motivate individual family offices to participate in charitable endeavors both within their community and abroad.
Starting from January 2024, a program will be launched in Singapore that enables eligible contributors to obtain complete tax deductions of 100 percent. These deductions will be capped at 40 percent of the donor's statutory income. These deductions will be applicable for donations made to foreign causes through certified local go-betweens.
Mr Menon stated that the implementation of PTIS is expected to promote and establish the act of philanthropic giving as a recurring and professional aspect within family offices in this locality.
Boost AML Measures
Additionally, MAS is planning to release a public consultation document later this month regarding further actions to enhance monitoring of money laundering risks within the sector of individual family offices.
Mr. Menon made an announcement stating that it is necessary for all single family offices to inform MAS when they begin their operations and every year thereafter. Additionally, they must establish a partnership with an MAS-regulated financial institution that will conduct anti-money laundering assessments on these single family offices.
This is mainly a proactive measure implemented by the MAS to protect against the dangers linked to a rise in money coming into Singapore.
According to MAS, the country's managed assets have been increasing at a consistent rate of 15 percent per year between 2017 and 2021. This growth has been driven by various investors, both on a global and regional scale, as well as individuals.
According to CNA, Mr. Menon responded to a query by stating that there hasn't been any specific pattern of money laundering associated with single family offices or any noticeable rise in reports of suspicious transactions.
"It's simply a natural tendency of a regulatory body. When there is a significant influx of funds, the likelihood of unlawful financial activities becomes heightened... hence, as a preventive measure, we aim to ensure that the industry is adequately equipped to handle the dangers associated with money laundering before they arise."
