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Singapore - Setting Up of Single-Family Office

Application Procedures and Fees


Singapore is considered one of the most prominent financial centres in South-East Asia due to its proximity to local and global private banks, investment banks and other financial service provider. It is also renowned for its stable governance and pro-business environment, as such, it has gained in popularity as a base for many high-net worth families to manage their assets and investments globally.


The Singapore Government have put in place tax incentives schemes for funds managed by family offices for both offshore and onshore vehicles to bolster Singapore’s appeal as a leading wealth management hub. The Monetary Authority of Singapore (MAS) has updated guidance on the incentive regime under the sections 13O (previously 13R) and 13U (previously 13X) of the Income Tax Act (“ITA”), applicable to applications submitted to the MAS on 18 April 2022 and onward.


The term ‘Single Family Office’ (SFO) is not defined under the Securities and Futures Act (SFA). A SFO typically refers to 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. The term ‘family’ in this context may refer to individuals who are lineal descendants from a single ancestor, as well as the spouses, ex-spouses, adopted children and stepchildren of these individuals.


SFOs generally do not require registration or licensing by the MAS if they fall under the exemptions.


For setting up Single Family Office under GIP program, please refer to Kaizen’s GIP quotation for more details.


Key considerations of a Single-Family Office:

    • Management of the Funds’ Assets
    • Segregation
    • Independent Advice
    • Family Governance
    • Investment Governance
    • Tax Free
    • Privacy

1.

Single Family Office Service Fees


Our fee for setting up a Single Family Office and applying for 13O (Onshore Fund Tax Exemption Scheme) with the Monetary Authority of Singapore (MAS) as well as one (1) Employment Pass application (EP) with the Ministry of Manpower (MOM) is SGD65,000.


In particular, the fee includes following services:

(1)    Communication with client and providing draft Personal Wealth Report by Chartered Accountant;

(2)    Discussion with client about the Family office structure

(3)    Setting up the entities according to the structure agreed;

(4)    Providing drafted Investment Management Agreement;

(5)    Review of documents related to the implementation from tax perspective;

(6)    Application for 13O – Onshore (Singapore Resident Company) Fund Tax Exemption Scheme;

(7)    Legal opinion on CMS License Exemption;

(8)    EP Application.


Notes:


The fees quoted above exclude out-of-pocket expenses or reimbursement such as translation fees, card issuance fees, government fees, delivery fees, notarial fees, etc.

    1. All fees quoted above exclude Goods and Service Tax (business tax) at 7%, if applicable.
    2. In the event of the rejection of an application/appeal/renewal, the fees quoted above are non-refundable.
    3. The fees stated above exclude the preparation of the business plan, where applicable. Please contact us for a quotation.
    4. The fees states exclude the service for job advertisement. If you require our assistance in placing a job advertisement, our service fee is SGD1,800 excluding the platform fee.
    5. In the event of a rejection of the EP application, the filing of a maximum of 2 appeals within 3 months from the date of rejection as per MOM’s guideline are possible. An additional service fee will apply for assisting with an EP appeal.

2.

Time of Billing and Payment Methods


We currently only accept check, cash or TT and credit card payment through PayPal. If invoice is settled by PayPal, an extra 5% service fee will be charged.


Upon receipt of confirmation of engagement, we will issue an invoice and email it together with detailed wire instructions to you. Because of the nature of services, we require full payment in advance. In addition, once service is commenced, no service fees will be refunded.


If Taiwan uniform invoice is required, a Business Tax at 5% of the invoiced amount will be charged and collected.


3.

Application Eligibility and Requirements


To encourage the development of family offices, the government of Singapore grants license exemptions and tax incentive for family offices, as follows:



130 130U
Minimum Asset Under Management (AUM)
  1. The fund has a minimum fund size of SGD10 million at the point of application;
  2. The fund commits to increasing its AUM to SGD20 million within a 2-year grace period.
  1. The fund has a minimum fund size of SGD50 million at the point of application. Investment Professionals (IPs)
Investment Professionals (IPs)
IPs refer to portfolio managers, research analysts and
traders who are SG tax residents, earning more than S$3,500 per month and must be engaging substantially in the qualifying activity.
  1. The fund is managed or advised directly throughout each basis period relating to any year of assessment by a family office in Singapore, where the family office employs at least 2 IPs;
  2. If the family office is unable to employ 2 IPs by the point of application, the fund would be given a 1-year grace period to employ the second IP.
  1. The fund is managed or advised directly throughout each basis period relating to any year of assessment by a family office in Singapore, where the family office employs at least 3 IPs with at least 1 IP being a non-family member.
  2. If the family office is unable to employ one non-family member as an IP, the fund would be given a one-year grace period to do so.
Business Spending
  1. The fund will incur at least SGD200,000 in total business spending in each basis period relating to any year of assessment, subject to tiered business spending framework1.
  1. The fund will incur at least SGD500,000 in local business spending in each basis period relating to any year of assessment, subject to tiered business spending framework.
Local Investment
  1. The fund managed by the family office will invest at least 10% of its AUM or SGD10 million, whichever is lower, in local investment at any one point in time.
  2. If the fund is unable to invest at least 10% of its AUM or SGD10 million, whichever is lower, in local investments by the point of application, the fund would be given a 1-year grace period to do so.

Note:
  1. For an AUM equal to or above SGD50 and under SGD100 million, the minimum annual business spending must be SGD500,000; for an AUM equal to or above SGD100 million, it must be SGD1 million.
  2. Local investment products may include a) equities listed on Singapore-licensed exchanges, b) qualifying debt securities, c) funds distributed by Singapore licensed/registered fund managers, d) private equity investments into non-listed Singapore-incorporated companies (e.g., start-ups)      with operating business(es) in Singapore.

As family offices have different requirements and thresholds, we recommend you consult with Kaizen consultants (info@kaizenvis.com) prior to confirming your eligibility.


4.

Application Process


Generally, setting up a Single-Family Office involves the following main steps:

(1) Hold first discussion with legal and tax advisors

  • Initial meeting with legal and tax advisors to decide on a family office structure.
  • The applicant chooses the domicile of the investment company, and the investment company, family office, trusts and special purpose vehicles etc. are organized.
(2) Set up initial entities, preparing regulatory application

  • Entities are incorporated, trusts established, and relevant investment professionals are hired.
  • Once structure is in place, tax advisors apply for tax exemption.
  • Legal advisors prepare the management agreement and a legal opinion, or apply to MAS for the licensing exemption (depending on chosen structure).
  • Legal counsel reviews constitutive documents, the trust deed, the relevant documents where necessary.
(3) Establish additional entities and progress towards a family office

  • After family office operations have begun and assets under management have grown, the family may consider expanding the existing structure or taking on new mandates to run a family office.
  • This may include setting up additional investment entities or trust structures to cater to new mandates, investment objectives or additional beneficiaries.
  • This may also involve hiring additional professionals (such as investment, legal or compliance, specialists) to take advantage of the economies of scale of running a family office.

5.

Documents required


The applicant is required to prepare the following supporting documents:

(1) Applicant’s passport;
(2) Applicant’s latest three months proof of address, e.g., utility bill, telephone bill or bank statement;
(3) Applicant’s resume or CV;
(4) Applicant’s proof of source of wealth;
(5) No criminal record;
(6) The particular of applicant’s family member.

Applications will be submitted directly to the MAS, and an interview might be requested by a MAS officer on a case-by-case basis.


6.

Time Frame for Application


The current normal processing time for an application is at least 10 months from the receipt of a complete application along with the necessary supporting documents.
Kaizen is equipped with experienced and qualified professional consultants and is positioned to provide the supporting professional advice and services in respect of the formation and registration of company, application for various business licenses and permits, company compliance, tax planning, audit, accounting and employment and permanent visas in Singapore. Please call and talk to our professional consultants for details.


Related Topics: Singapore Personalised Employment Pass (PEP) | Singapore Employment Pass | Singapore EntrePass


Should you need any assistance or wish to obtain more information, please also browse our official website at www.kaizenvis.com or contact us through the following means:


T: +852 2341 1444

M: +852 5616 4140, +86 152 1943 4614

WhatsApp/WeChat/Line: +852 5616 4140

Skype: kaizencpa

E: info@kaizenvis.com