Family offices unstopped by tougher tax rules but face staffing hurdles, longer wait times

SUPER-RICH families looking to park some of their wealth in Singapore are unstopped by a more-stringent criteria to qualify for tax breaks, but may hit roadblocks on staffing and approvals.

While the Monetary Authority of Singapore (MAS) had in April raised the bar for family offices to qualify for tax incentives here – including setting minimum requirements for capital and asset under management, as well as local investments – industry players said family offices have not wavered in their commitment to set up shop in the city-state. 

Tommy Leung, UBS’s co-head of global family and institutional wealth for Asia-Pacific, said family offices understand that regulations change along with the country’s needs. 

“Frankly, I have not seen any changes in sentiment as a result of these changes in MAS’s requirements. I think most of these family offices are very sensible,” Leung said.

He was speaking at a media call on the release of the bank’s third annual Global Family Office Report on Thursday (Jun 9).

Singapore’s recent property cooling measures also have not had much impact on client’s interest, Leung said, in response to questions from The Business Times.

“For a lot of our clients, when they set up a family office in Singapore, their goal is to diversify their wealth out of this region. So to the extent that they decide to make property investments, they tend to cast their net quite wide. They tend to invest globally. So far, I haven’t really seen a lot of impact on any of these family offices, as a result of these cooling measures,” he said.

However, Leung said family offices here could face staffing challenges amid the massive growth of family offices in recent years.

MAS estimates that Singapore has about 400 family offices as at the end of 2020. The authority said it had approved more than 100 applications in just the first 4 months of this year.

Hiring the right people to do the job is a challenge with the increase in demand for talent, and also because family offices are a relatively new area of development for Singapore. The number of family offices had risen 5-fold between 2017 and 2019, according to MAS.

A longer wait for approvals – at least doubling from 4 to 8 months, according to recent media reports – is another hurdle that applicants have been confronted with.

Jaydee Lin, managing partner and co-founder of Raffles Family Office, said his firm saw an “exceptionally high level of interest” in the weeks before MAS’s tightened criteria was implemented on Apr 18.

But the interest remains.

“Any processing delays that may have been prompted by the policy change have done little to shift the steady demand for Singapore family office setup services we have experienced for several years now,” Lin said.

Camilla Jiang, chief marketing officer at Prime Asia Asset Management, said: “Short-term wise, they do see some inconvenience caused by the longer waiting time and have to manage proactively but long term, there is no change in terms of their commitment.”