The Monetary Authority of Singapore will be adjusting tax incentives for single family offices to deploy capital more purposefully for the benefit of the city-state and the broader region.
As previously outlined by Monetary Authority of Singapore (MAS) chairman Tharman Shanmugaratnam, the city-state will look to adjust tax incentives for single family offices (SFO), according to a statement.
This is aimed at encouraging SFOs to «deploy their capital more purposefully to benefit Singapore and the region; and increase contributions towards environmental and social causes», said MAS managing director Ravi Menon during a media conference.
The MAS will look to make enhancements in five areas.
Blended Finance Structures
First, it will encourage SFO participation in blended finance structures, including those that support the region’s net zero transition.
Three new features will be introduced: a broadened scope of eligible investments; more recognition of concessional capital; and recognition of grants from SFOs to support such blended finance structures.
Climate-Related Projects
Second, for the purpose of assessing if an SFO has met investment requirements, MAS will also recognize climate-related investment not just in Singapore but anywhere in the world.
«Climate change is a global problem that is not bounded by national borders. As a low-lying island state, Singapore is particularly vulnerable to climate change. We should thus recognise all efforts made to address climate change issues,» Menon added.
Local Investments
Third, MAS will encourage SFOs to invest in Singapore companies and the local equity market.
It will make two enhancements to support this goal: expand the scope of recognized investments to include private credit; and recognition of twice the amount invested in Singapore-listed equities as well as eligible ETFs and unlisted funds investing primarily in Singapore-listed equities, for the purpose of meeting investment requirements.
Job and Value Creation
Fourth, MAS will look to encourage SFOs to contribute more to job and value creation in Singapore.
Two enhancements will be made: the requirement of at least one mandatory hire of an investment professional that is a non-family member; and the requirement of meeting the business spending requirement solely from local spending, compared to the previous arrangement that included overseas spending.
Philanthropy
Fifth and finally, Singapore will encourage SFOs to conduct philanthropic activities through the city-state, both locally and overseas. The two enhancements that will be rolled out include the recognition of donations to local charities and the launch of the Philanthropy Tax Incentive Scheme (PTIS) for family offices.
«The PTIS, which was announced in Budget 2023 and will go live on 1 January 2024, will allow qualifying donors in Singapore to claim 100 percent tax deduction, capped at 40 percent of the donor’s statutory income, for overseas donations made through qualifying local intermediaries,» Menon explained.
«MAS has been providing tax incentives to the SFO sector to help create jobs, generate demand for domestic service providers, and channel capital to enterprises in Singapore.»
