New Incentives for Family Offices

New Incentives for Family Offices

At the 50th anniversary of the Association of Banks in Singapore (“ABS”) last Friday, Senior Minister and Monetary Authority of Singapore (“MAS”) chairman Mr. Tharman Shanmugaratnam announced that improvements will be made to the tax incentive scheme for single family offices (“SFO”) in Singapore. These include providing tax privileges, incentives or grants for contributions to charity, channelling capital towards blended finance and investing in the mitigation of global climate change.  Further details of these will be announced by the MAS in July.

In his speech, Mr. Tharman highlighted SFO as “a significant pool of capital that is growing faster than most other sources of wealth”, underlining the importance of SFO as a source of growth capital. The proposed tax privileges, incentives and grants are aimed at attracting capital to tackle climate change via new models of blended finance that support sustainable projects with long term returns, and to encourage family offices to play a more significant role in addressing social and environmental causes.

The proposed tax privileges, incentives and grants come on top of the new philanthropy tax incentive scheme that Finance Minister Mr. Lawrence Wong announced earlier in February 2023, as part of Budget 2023. Donors with family offices in Singapore will be able to get 100% tax deduction for overseas donations if made through qualifying local intermediaries. To qualify, donors must have a fund under MAS’s Section 13O or 13U schemes and meet certain conditions such as having an incremental business spending of S$200,000. The tax deduction is capped at 40% of the donor’s statutory income. Through this new philanthropy tax incentive scheme, Singapore aims to spur philanthropic activities in Singapore, and boost its status as a philanthropic hub. More information on this philanthropy tax incentive scheme will be provided by June 30.

At the 50th anniversary of the ABS, ABS also launched a new Trade Finance Registry to maintain a centralized database of trade finance transactions in Singapore. This will help reduce duplicate financing where multiple parties finance a single transaction. The data will be encrypted to ensure privacy and only corporate customers’ information will be provided to the registry. This will help boost Singapore as a leading trade centre and help reduce problems of fraud.

We will provide updates once further details of the tax incentive schemes have been released.

About Duane Morris & Selvam LLP

Duane Morris & Selvam LLP (DMS) is a joint law venture between international firm Duane Morris LLP (DM) and Singapore-based firm Selvam LLC. DMS runs a unique Latin American-Asian practice out of Singapore, with a team of international lawyers qualified in multiple jurisdictions including Singapore, the US, the UK, Canada, Mexico and Colombia, with substantial experience in international transactions and disputes. DMS also has a wide cooperation network with some of the best Latin American and Asian law firms.

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The opinions expressed on this blog are those of the author and are not to be construed as legal advice.

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