Family Offices For Rich Clans To Wait Longer For Singapore Tax Breaks

Signing up to be super rich in Singapore has rarely taken this long. Family offices attempting to register for tax exemptions in the city-state are facing waits of at least eight months compared with about half that time a year ago, people familiar with the matter told David Ramli, Joyce Koh, and Lulu Yilun Chen of Bloomberg.

Photo Insert: The Marina Bay financial district, Singapore

Interest from newly established entities has added to the surge in applications seen over the past year, the sources said. While creating family offices — organizations that invest the money of wealthy persons — doesn’t require a license in Singapore, they do need approval from the Monetary Authority of Singapore (MAS) to get valuable tax breaks.

Singapore has worked hard to attract some of the world’s wealthiest clans; its low taxes, relative safety, and gradual re-opening of its borders have made it an ideal haven.

But with demand soaring over the past year — especially among Chinese and their heirs — it’s started introducing new rules and taxes that could winnow the field. Singapore had around 400 family offices at the end of 2020, MAS estimates, including the likes of Google co-founder Sergey Brin and hedge fund billionaire Ray Dalio.

“Over the past few years, the number of family offices in Singapore has grown, in line with the growth of family offices globally,” a MAS spokesperson said in an emailed response to Bloomberg queries.

“In the past four months, we have approved more than 100 applications.”

Two service providers said a large number of submissions were lodged in mid-April when the MAS changed its rules for tax exemptions with a one-week grace period. What had been known as “13X” and “13R” became “13U” and “13O” respectively — with both including stricter requirements on assets under management, minimum local spending, and the number of employees at the firm.

In addition to demanding S$200,000 in annual spending, the newly renamed “13O” regime requires organizations to have at least S$10 million in assets under management at inception, rising to S$20 million within two years. It also needs at least two investment professionals to eventually work for the firm.

With the tax benefits backdated to the time of application for successful lodgers — and Greater China’s COVID-19 woes prompting residents to think about moving — the backlog is unlikely to deter cashed-up families from creating family offices in Singapore, where the costs of rentals, mansions, and luxury cars have risen sharply.

Family offices are just one of the varied investment vehicles that are increasingly interested in Singapore. The total value of all assets under management based in the tiny country reached S$4.7 trillion by the end of 2020.

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