By David Ramli, Joyce Koh and Lulu Yilun Chen
(Bloomberg) – Registering to become super rich in Singapore has rarely taken so long.
Family offices trying to register for tax exemptions in the city-state face waits of at least eight months, up from about half that time a year ago, according to people familiar with the case.
The interest from newly created entities added to the increase in inquiries seen over the past year, the people said, asking not to be identified because the information is confidential. Although the establishment of family offices – organizations that invest the money of wealthy individuals – does not require a license in Singapore, they do need the approval of the Monetary Authority of Singapore to obtain valuable tax breaks.
Singapore has worked hard to attract some of the wealthiest clans in the world; its low taxes, its relative security and the gradual reopening of its borders have made it an ideal haven of peace. But with demand skyrocketing over the past year – especially among Chinese entrepreneurs and their heirs – it has begun to introduce new rules and taxes that could winnow the field.
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According to MAS estimates, Singapore had around 400 family offices at the end of 2020, including 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, paralleling the growth of family offices around the world,” a MAS spokesperson said in an email response to questions from Bloomberg. “Over the past four months, we’ve approved over 100 applications.”
Two service providers said a large number of submissions were made in mid-April when MAS changed its tax exemption rules with a one-week grace period. What was known as ’13X’ and ’13R’ became ’13U’ and ’13O’ respectively – both of which include stricter requirements on assets under management, minimum local spend and number of employees. the company.
In addition to requiring S$200,000 in annual expenditure, the newly renamed “13O” scheme requires organizations to have at least S$10 million in assets under management initially, rising to S$20 million in two years. He also needs at least two investment professionals to eventually work for the firm.
The stricter stipulations sparked a rush of applications trying to beat the April 18 deadline, according to people from different companies who helped submit applications for their clients.
“All requests for tax incentives are carefully assessed by MAS to ensure applicants’ commercial substance and the continued quality of the family office ecosystem in Singapore,” the MAS spokesperson said. “In some cases, incomplete or unclear applications may take longer to process.”
“MAS has and will continue to improve the application experience where possible, simplifying and automating the process and taking into account market feedback,” the spokesperson added.
With backdated tax benefits at the time of application for successful tenants – and Greater China’s Covid-19 woes prompting residents to think about moving – the backlog is unlikely to deter cashed-in families from creating homes. investment in Singapore, where rental costs, mansions and luxury cars have risen sharply.
Family offices are just one of the varied investment vehicles that are gaining increasing traction in Singapore. The total value of all assets under management based in the small country reached S$4.7 trillion at the end of 2020.
© 2022 Bloomberg L.P.