With the Government’s recent announcement on the new Family Office incentive scheme for Forest City Special Financial Zone, the Securities Commission has clarified further outlines on the details of the incentives.
Minister of Finance II, Senator Datuk Seri Amir Hamzah Azizan announced the Single Family Office scheme as part of incentive packages for the Forest City Special Financial Zone on Friday (20 September 2024). The SC has been tasked with coordinating the Single Family Office incentive scheme. The incentive provides for a 0% concessionary tax rate on income generated by
eligible investments from the Single Family Office Vehicle (SFOV1) with Forest City being the first location in Malaysia to offer a 0% tax rate incentive.
The SC said the incentives offered are subjected to several conditions including the establishment and operation with a registered office in Pulau 1, Forest City Special Financial Zone. Duration: 20 years, covering the initial period of 10 years and additional/subsequent 10 years
A Single Family Office Vehicle (SFOV) is typically a corporate vehicle which is wholly owned, directly or indirectly, by one or more individuals from a single family and established solely for the purposes of holding the investments of the family members. To qualify for Initial Period (10 years), the SFOV must be a new investment holding company incorporated in
Malaysia and seek pre-registration with the SC on the eligibility of the tax incentives,
also the management company or SFO2 which is a related company of SFOV to be set up and operate out of Pulau 1, Forest City Special Financial Zone with at least one investment professional with a minimum monthly salary of RM10,000. It must hold AUM of at least RM30 million; meet minimum local investment in eligible and promoted investments of at least 10% of assets under management (AUM) or RM10 million whichever is lower; SFOV to spend operating expenditure (OPEX) locally a minimum of RM500,000 annually; Employ a minimum of two full-time employees of whom at least one is an investment professional, with minimum monthly salary of RM10,000.
These entities must also have to qualify for an Additional Period (additional 10 years): Hold AUM of at least RM50 million; meet minimum local investment in eligible and promoted investments of at least 10% of asset under management (AUM) or RM10 million whichever is higher; SFOV to spend OPEX locally (30% higher than Initial Period) a minimum of RM650,000 annually; Employ a minimum of four full-time employees.
SC said the SFO or management company may not need to get certain licenses under the Capital Markets and Services Act, such as for fund management, as long as it only provides services for its related corporation, the SFOV.
Chairman Dato’ Mohammad Faiz Azmi said that this move taps on the rising trend of Family Offices globally, providing comprehensive wealth management solutions, while leveraging on Malaysia’s robust regulatory environment.
