The Monetary Authority of Singapore (MAS) announced that the revised framework for Single Family Offices (SFOs), which provides a simple, streamlined process for SFOs to establish operations in Singapore, was brought into force on 15 June.

The revised framework creates a straight through class exemption from licensing for all qualifying SFOs operating in Singapore, regardless of structure. SFOs that meet the requirements need only notify MAS of their operations and maintain an account with a MAS-licensed bank. They also have to file an annual return with information on the total assets under management and the name of their bank.

This revision follows a public consultation on the revised SFO framework and the policy responses by MAS to the industry’s feedback published in November 2024. Existing SFOs operating in Singapore will have a transitional period of one year to comply with the revised framework.

To operate in Singapore under the licensing exemption framework an SFO must only conduct fund management for, or on behalf of:

• Family members, including family trusts and corporations wholly owned by, and for the sole benefit of the family.
• Charitable organisation(s) funded exclusively by the family.
• Key employees (Executive Directors, Chief Executive Officer, Chief Financial Officer and investment professionals). Assets originating from key employees must not exceed 10% of the total value of the SFO’s assets under management in aggregate.

An SFO can be held via a trust, foundation or any other legal structure, provided the funding of the SFO originates exclusively from members of the same family, whether directly or indirectly, and key employees, who are permitted to own a non-controlling stake of up to 10%.

An SFO must be incorporated in Singapore and the SFO and its fund vehicle(s) must each open and maintain a bank account with a MAS-licensed bank. Foreign incorporated fund vehicle(s) may open and maintain an account with a MAS-licensed bank in Singapore, or with a regulated bank in a jurisdiction that complies with equivalent anti-money laundering and countering of financing of terrorism (AML/CFT) requirements consistent with Financial Action Task Force (FATF) standards.

The term ‘family member’ refers to all lineal descendants of a common ancestor (living or deceased) who are up to five generations removed from the youngest generation that established the SFO in Singapore, including:

• Current or former spouses.
• Adopted children.
• Stepchildren.
• Parents-in-law.
• Siblings-in-law.

It is not MAS’ intention to license SFOs because, unlike licensed fund managers, they manage their own assets or assets belonging to members of the same family. A new SFO must simply file a Notice of Commencement of Business with MAS within 14 days of commencement of its operations in Singapore. An existing SFO that intends to continue operating in Singapore will have one year from 15 June 2026 to satisfy the conditions under the licensing exemption and to file the Notification.

An SFO is required submit its first annual return within four months from the end of its current financial year, in respect of that financial year. There is no requirement to submit an annual return in respect of the SFO’s previous financial year prior to Notification.

A service provider can submit the Notification and annual returns on behalf of an SFO. The Notification must be accompanied by a copy of the declaration signed by a family member who provided the assets to be managed by the SFO, and a director of the SFO. Only one signatory is required if the family member is also a director of the SFO. The service provider cannot provide the signed declaration on behalf of the SFO. Electronic signatures are accepted.

An SFO must ensure that it is able to satisfy all the conditions of the exemption, before submitting its Notification. There is no requirement for an SFO to seek legal advice to support its qualification under the exemption or to provide a legal opinion when submitting its Notification. An SFO is not required to provide the name of its legal adviser as part of the Notification.

“The revised MAS framework is a welcome development for Singapore’s Single Family Office ecosystem, particularly in moving towards a clearer and more practical notification-based regime. While legal advice is no longer formally required as part of the notification process, families should still take care to ensure that the structure, governance, banking arrangements and ongoing compliance are properly thought through from the outset,” said Andrew Galway, Managing Director of Sovereign Management Services in Singapore.

“This is where experienced partners can add real value. At Sovereign, we are well placed to help families navigate the practical implementation of a Singapore SFO, coordinate with suitable professional advisers where needed, and introduce appropriate Singapore banking partners. The framework may be simpler, but getting the structure right at the beginning remains important.”

Banks are also required to conduct the AML/CFT checks on SFOs and their fund vehicles. The customer due diligence and ongoing monitoring checks conducted on an SFO should be subject to the bank’s risk-based approach when it establishes a business relation with its customer.

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A Will remains the default estate planning tool for many Indian families. It is familiar, straightforward and is typically sufficient for simple estates and clear asset distribution. But in practice, a Will typically deals with succession too late because it takes effect only upon death, is subject to the sometimes lengthy and expensive probate process, is vulnerable to legal challenges, and generally lacks the flexibility to cater for family businesses, multiple assets and complex family dynamics.

These limitations are increasingly significant for Indian families whose wealth is no longer held only in India. Many high net worth Indians now have international operating companies, holding companies and investment portfolios based in international financial centres such as Singapore, the UAE, the UK or Guernsey, while family members, real estate and other assets may be spread across multiple jurisdictions worldwide.

In this context, succession planning is no longer just about who receives what. It is about maintaining control and continuity, structuring wealth for long-term protection and succession, while also providing tax efficiency and mechanisms for effective governance and dispute prevention. This might include setting up appropriate vehicles such as Trusts, Foundations, Companies and Partnerships.

Trusts are highly effective tools for asset management and protection, multi-generational succession planning, philanthropy, flexible distributions and provision for vulnerable beneficiaries.

The limitations of a Will

Indian succession law is complex because the applicable rules depend on religion, asset type and location, and whether the deceased left a valid Will. The Indian Succession Act 1925 can apply to all testamentary successions, but intestate successions (where no Will has been made) will be governed by the Hindu Succession Act 1956 or, for other religious communities in India, by distinct legal frameworks that reflect their religious laws and customs.

A properly drafted Will is still important. Recent Indian case law confirms that a Will is not automatically invalid merely because natural heirs, such as a spouse or children, are excluded. The Supreme Court has just reiterated (Parvathi Nairthi v Laxmi Nairthy 2026 INSC 521) that exclusion of natural heirs is not, by itself, sufficient to make a Will suspicious if the Will is otherwise genuine and legally sound.

But that does not mean a Will is dispute-proof. In many family situations, the real dispute is not just about legal entitlement. It is about perceived fairness, control of a business, influence of spouses, access to liquidity, family expectations or mistrust between siblings. A Will may express intention, but it rarely creates an operating system for how the family wealth should be managed after the founder is gone.

Matrimonial Risks

One area of high concern for Indian families is the risk that wealth intended for children or grandchildren becomes exposed to matrimonial disputes or pressure from in-laws. This needs to be approached carefully. A Trust should not be used to defeat legitimate claims, conceal assets or frustrate existing legal obligations. Courts can disregard transactions that are artificial, fraudulent or designed to deprive a spouse or creditor of proper legal rights.

Where assets are settled into a properly constituted Family Trust before any dispute arises, with independent trustees, clear beneficiary classes and genuine fiduciary administration, the Trust can help ensure that family wealth remains within the intended family line and is not fragmented by future personal events.

This is particularly relevant where parents wish to benefit a child without giving them outright ownership. Gifts or inheritances may be vulnerable to poor investment decisions, creditor risk, marital pressure or family disputes. A discretionary Trust can instead provide access to benefit without necessarily giving the beneficiary direct control or ownership of the underlying assets.

Indian matrimonial and domestic laws also recognise specific rights and protections, including a woman’s rights over ‘stridhan’ (a woman’s property) and protections under the Protection of Women from Domestic Violence Act 2005. This is why planning must be done transparently, with Indian legal advice, and with a clear distinction between legitimate long-term succession planning and any attempt to defeat existing legal claims.

High net worth families need structures, not documents

A modern family wealth structure is not just a document. It is a governance framework that is capable of responding to questions that a Will often leaves unresolved:

• Who should control the family business after the founder?
• Should all children benefit equally, even if only one works in the business?
• Should spouses be beneficiaries?
• Should in-laws have access to information or influence?
• How should distributions be made?
• Who decides if and when assets are sold?
• How are younger beneficiaries educated before receiving wealth?
• What happens if a child divorces, becomes insolvent or develops a dependency issue?

The importance of a Trust is that it separates economic benefit from legal ownership and control. The trustee holds the legal title to the Trust assets and administers them for the beneficiaries according to the Trust deed. In India, the Indian Trusts Act 1882 defines and governs private Trusts, while international families may also consider offshore (overseas) Trusts where assets, banking relationships and family members are located outside India.

Singapore Success

Singapore has become a leading jurisdiction for Asian family wealth because it combines legal stability, a sophisticated banking and professional services ecosystem and a regulated trust industry. Licensed trust companies in Singapore are governed under the Trust Companies Act 2005, and MAS states that companies carrying on trust business must hold a trust business licence unless exempt.

Singapore Trusts are built on English common law foundations but its framework has evolved through specific local legislation and progressive court rulings to become a leading global wealth management and succession planning hub. Singapore trust law is supported by the Trustees Act 1967, which sets out key trustee powers and duties.

From a practical perspective, this means an Indian family can establish a Singapore Trust to hold non-Indian assets such as investment portfolios, shares in offshore holding companies, family investment vehicles, or international real estate holding structures.

Singapore also offers tax and estate planning advantages in appropriate cases. Singapore completely abolished estate duty in 2008 and the Inland Revenue Authority of Singapore (IRAS) states that gains from the sale of property, shares and financial instruments are generally not taxable unless they are trading gains or otherwise income in nature.

For Indian families, Singapore is especially attractive where there is already a commercial nexus: regional business operations, investment portfolios booked in Singapore or family office activity in Asia. The Trust structure can also be paired with a Singapore private trust company, family office, investment committee, or holding company, depending on the family’s objectives and tax advice.

Guernsey Gain

Guernsey is another leading jurisdiction outside Asia for the establishment and management of Trusts. It is used by international families, particularly those seeking a common law environment, an effective judicial system, experienced fiduciary providers and strong banking and financial services sector.

Guernsey’s principal trusts legislation is the Trusts (Guernsey) Law 2007, which is supported by a body of case law from the Island’s courts. It is often used for cross-border estate planning and asset protection because Guernsey law accommodates non-resident settlors and beneficiaries, and provides protections against claims based on foreign forced heirship rules.

The Island further offers fiscal neutrality. Trusts with no Guernsey-resident beneficiaries are only liable to tax on Guernsey source income and Guernsey bank deposit interest is not treated as Guernsey source income when received by the trustees of a trust with no Guernsey-resident beneficiaries. This makes it a highly attractive platform for Indian families with assets in the UK, Europe, the Middle East or other financial centres, to operate alongside their Asian advisory and banking relationships.

Singapore or Guernsey

A Singapore Trust may be a suitable structure where the family’s assets, banks, advisers and next generation are Asia-focused. A Guernsey Trust may be more appropriate where the family wants a more European nexus, or continuity with existing international structures and advisers.

In some cases, a family may set up a Trust in one jurisdiction and position the underlying companies, investment accounts or holding vehicles in another jurisdiction. The key is to match the structure to the family’s circumstances: residency and tax residency, asset location, exchange control, future migration plans, family governance needs and the risk profile of the beneficiaries.

A practical structure for Global Families

A typical structure might include:

1. Family Trust – the Trust holds the family’s international wealth for a defined class of beneficiaries, such as children, remoter descendants and selected family members. The settlor decides how the assets in a Trust should be used. This is usually set out in a document called the ‘Trust Deed’, a very flexible instrument that can include directions to the trustee not to make distributions to beneficiaries whose assets are subject to attachment or need protection from marriage breakdown.
2. Underlying Holding Company – to hold bankable assets, shares in family investment vehicles, real estate holding companies or international operating interests.
3. Letter of Wishes – the Trust settlor sets out how they would like the trustees to manage the assets of the Trust and to provide guidance on which beneficiaries should benefit, when and on what terms. A Letter of Wishes can be changed at any time, without the cost and formality of amending the terms of the Will or Trust deed and, unlike a Will, can generally be kept confidential from the beneficiaries.
4. Family Governance Framework – a structure that sets out how a family makes decisions, how family members are kept informed and how family governance integrates with other structures such as a family Trust or family business. The framework typically consists of a family charter and a family council.
5. Indian Tax and Legal Review – for Indian resident settlors or beneficiaries it is essential to ensure that the Trust structure is genuine, properly administered and doesn’t create exposure to tax and potential claims, while protecting personal and business assets held in different jurisdictions with strategies tailored to cross-border requirements.

The Will is not enough

For high net worth Indian families with global assets, a Will is not likely to be sufficient or efficient on its own. A Will transfers assets after death, but a Trust can create a living governance framework that operates before and after death, across generations and jurisdictions.

Used properly, Singapore and Guernsey Trusts can help Indian families consolidate global wealth, reduce succession disputes, protect family assets from fragmentation and create a more disciplined framework for the next generation. The real value is continuity, governance, fiduciary oversight and clarity.

So the question should not be “Have you made a Will?” but “Have you created a structure that is capable of preserving multi-generational family wealth from deaths, divorces and disagreements?”

The post Beyond the Will: how Indian families should build legacy and succession structures that last appeared first on The Sovereign Group.

The Singapore government brought the Income Tax (Refundable Investment Credits) Regulations 2025 (S 577/2025) into force on 1 September, which introduce tax credits of up to 50% for qualifying business investments under the Global Anti-Base Erosion (GloBE) Rules of the OECD/G20 Pillar Two framework.

Pillar Two consists of two main rules that seek to ensure that multinationals pay a minimum level of tax on their profits. The GloBE Rules are the main Pillar Two Rules and apply a 15% minimum rate of tax on in-scope multinationals on their foreign profits.

The refundable investment credit (RIC) scheme was introduced by the Singapore government in 2024 to enhance Singapore’s attractiveness for investment by encouraging companies to make sizeable investments that bring substantive economic activities to Singapore in key economic sectors and new growth areas.

The scheme operates as a refundable credit framework to align with the OECD’s qualified refundable tax credit (QRTC) criteria. This alignment enables supported businesses to undertake substantive activities locally while maintaining compliance with international tax standards.

QRTCs are treated as income for Pillar Two GloBE purposes, as opposed to being reflected as a reduction in adjusted covered taxes. By including them in the denominator rather than the numerator of the effective tax rate calculation, it generally lessens the decrease in the jurisdictional effective tax rate.

In Singapore, RICs are awarded based on qualifying expenditure incurred by a company in respect of a qualifying project during the qualifying period. Each RIC award has a qualifying period of up to 10 years.

Eligible activities include investments to expand manufacturing capacity, establish headquarters or service centres, conduct R&D and innovation, engage in commodity trading or carry out energy efficiency or decarbonisation projects. Credits can be applied against corporate income tax, and any unused credits are refundable in cash within four years from the claim application.

Qualifying expenditures cover capital investment, manpower, training, professional services, intangible assets, materials, logistics, and financing costs. When approving RICs, authorities consider the scale and impact of the investment on the company’s business or industry, including effects on resource efficiency and environmental sustainability. Companies may opt to receive credits in tranches of 20%, 30% and 50% over two to four years.

The post Singapore brings Refundable Investment Credits regime into force appeared first on The Sovereign Group.

The Corporate Service Providers (CSP) Act 2024, which was passed by the Singapore parliament last July, is scheduled to come into force on 9 June together with the Corporate Service Providers (CSP) Regulations 2025.

From that date, all business entities carrying on a business of providing corporate services in and from Singapore are required to register with the Accounting & Corporate Regulatory Authority (ACRA) as registered CSPs. Corporate services activities include:

• Forming of corporations on behalf of other persons.
• Acting or arranging for other persons to act as directors or nominee shareholders.
• Providing registered office or business addresses.
• Carrying out designated activities in relation to the provision of accounting services.
• Carrying out transactions with ACRA on behalf of other persons or as a secretary of a company by way of business.

All registered CSPs will need to comply with obligations under the CSP Act and CSP Regulations, including those on anti-money laundering, countering the financing of terrorism and countering the proliferation of weapons of mass destruction (AML / CFT / CPF).

Persons acting as nominee directors by way of business will need to be arranged by registered CSPs, after they have been assessed as fit and proper by the registered CSPs. Fines will also be introduced for breaches of AML/ CPF/ CFT obligations by registered CSPs and their senior management.

Previously, companies and other business entities acting as CSPs that did not file transactions on behalf of their customers with ACRA were not required to be registered as registered filing agents (RFAs) and consequently were not subject to AML/ CFT/ PF obligations.

The changes are designed to enhance the regulatory regime and level the playing field for all CSPs carrying on business in Singapore. They will also ensure Singapore’s continued compliance with the FATF’s March 2022 update of its standards on beneficial ownership that requires nominee directors and nominee shareholders to disclose the identity of their nominators to the Registrar and to publicly disclose their nominee status.

The Act prohibits persons from acting as nominee directors by way of business unless the appointments are arranged by registered CSPs and they have been assessed as fit and proper by the registered CSPs. This measure is designed to prevent the misuse of nominee directorship arrangements by CSPs who arrange for unqualified individuals to act as nominee directors for their customers.

In determining whether the person is a fit and proper person, the registered CSP must take reasonable steps to satisfy himself that the person is not disqualified from acting as a director of a company under any written law and consider other factors.

A person who breaches this requirement is guilty of an offence and will be liable on conviction to a fine not exceeding SGD10,000. A registered CSP which breaches this requirement is guilty of an offence and shall be liable on conviction to a fine not exceeding SGD100,000.

Sovereign welcomes this development. While nominee directorship arrangements are a legitimate service provided by many CSPs to help their overseas-based clients fulfil Singapore’s requirement for an ordinarily resident director to set up a company in Singapore, they were vulnerable to abuse.

Local resident directors in Singapore must be Singapore citizens, permanent residents or foreigners with Employment Passes (EPs). Sovereign maintains a list of experienced nominee directors, who have been selected in accordance with the regulations and are fully aware of their duties and responsibilities as directors. These persons are also strictly limited as to the number of directorships that they can hold concurrently.

Singapore, alongside Hong Kong, is regarded as one of the preeminent financial centres in South-East Asia and has gained in popularity as a base for family offices – privately held companies that manage the wealth of ultra-rich families.

Singapore enjoys a reputation as a well-governed and well-regulated financial centre that offers political stability and a pro-business environment, as well as the presence of local and global private banks, investment banks and other financial service providers and professionals.

The number of single-family offices (SFOs) in Singapore jumped by 43% in 2024, from 1,400 in place at end-2023, to exceed 2,000. Given that the Monetary Authority of Singapore (MAS) had awarded tax incentives to around 1,650 SFOs by the end of August 2024, it means the number of SFOs grew more than 21% in the last four months of 2024 alone.

Last October, MAS set out changes to the Offshore Fund Tax Incentive Scheme (Section 13D of the Income Tax Act), the Resident Fund Tax Incentive Scheme (Section 13O) and the Enhanced-tier Fund Tax Incentive Scheme (Section 13U), which are all will be extended by five years until 31 December 2029.

It also introduced a new Section 13OA, which extends the Resident Fund Tax Incentive Scheme to funds constituted as limited partnerships, while the Goods and Services Tax remission and withholding tax exemption for funds enjoying the Tax Incentive Schemes will continue to apply until 31 December 2029.

The assets under management (AUM) requirement applicable to 13U remains at SGD50 million, but this requirement must be satisfied not just at the time of application but at the end of each basis period. A 13O fund will be required to have AUM of SGD5 million at the end of each basis period.

As from 1 January 2025, the AUM of a fund will no longer be computed based on net asset value (NAV) but will be measured with reference to the value of investments held by the fund that qualify as designated investments (DI). Funds are no longer required to seek MAS approval for a change in investment strategy but must notify MAS of such changes.

The business spending requirement applicable to 13O, 13OA, and 13U award holders will be revised so that the amount applicable will vary between SGD200,000 and SGD500,000, depending upon the AUM.

A new closed-end fund election will be made available for 13O, 13OA, and 13U non-single family office (non-SFO) applicants which, subject to conditions, will provide AUM and business spending simplifications to better tailor the use of the incentives in closed-ended contexts.

These changes are positive and forward-looking. They are in line Singapore’s policy of incentivising funds, offering greater flexibility, particularly to smaller funds for which the qualifying conditions may have been challenging, and also ensuring substance in Singapore, which has been an area of focus in recent years.

Family offices can utilise the Variable Capital Company (VCC) structure, which can be set up as a standalone fund, or as an umbrella fund with two or more sub-funds. A VCC structure is regarded as a single company, with a single identity for tax purposes, removing the need for multiple tax returns.

Shares of a VCC are redeemable at the fund’s net asset value (NAV), and VCCs can pay dividends from the capital, which is not typically allowable in other forms of corporate vehicles. In addition, VCC shareholders register will not be publicly available, offering privacy to investors.

Sovereign Management Services can assist with the process of setting up a family office and a VCC in Singapore, applying for tax incentives and assisting with the regulatory process and ongoing accounting and taxation requirements. In partnership with Drew Napier, one of Singapore’s leading and largest full-service law firms, we can obtain legal opinions and support for obtaining the family office status.

In addition to our corporate and trust management services, Sovereign can provide clients in Singapore with the on-going administrative support that enables them to maximise opportunities and achieve long-term sustainability, from full back-office solutions to assistance with tax and regulatory compliance and filing fees and returns.

This includes in-house bookkeeping and accounting services, including the preparation of unaudited financial statements and handling complex consolidations, as well as human resources, pensions, insurance, trademark and intellectual property protection, obtaining local licences and permits, executive relocation and specialist tax advice.

The post Singapore ushers in new era of corporate regulation, while single-family offices prosper appeared first on The Sovereign Group.

High-net-worth (HNW) families with personal financial assets between USD1 million and USD50 million and ultra-high-net-worth (UHNW) families with more than USD50 million in the Asia-Pacific region are set to undergo an intergenerational wealth transfer estimated at USD5.8 trillion between 2023 and 2030, according to McKinsey analysis.

With many such families in the Asia-Pacific region owning operating businesses, effective succession planning is even more essential for preserving wealth and ensuring a smooth transition of assets across generations.

A trust is a flexible legal arrangement that can be structured to meet the objectives of a settlor, providing families with the opportunity to make generational transfers of wealth while preserving a degree of control and asset protection.

The assets within a trust are safeguarded by the trustees, which can help protect against claims arising from business creditors or in the event of divorce. Where a family’s wealth is held in a business, consolidating the family’s operating businesses under a trust avoids fragmenting shareholdings amongst individual family members and reduces the risk of disputes and claims in relation to the family business.

Trusts can further help ensure that your chosen beneficiaries are all suitably provided for following your death, particularly where there is any concern as to their ability to manage the assets appropriately. When assets are settled on trust they cease to be part of the settlor’s estate, eliminating the need for probate on death and avoiding any forced heirship provisions that might apply in the settlor’s country of residence.

What Should You Consider Before Setting Up a Family Trust?

Families today are facing increasingly complex questions around how to protect their wealth, preserve their values and empower future generations. Family Trusts offer a powerful solution, but before setting up any trust it’s essential to ask the right questions.

1. What exactly are you trying to protect or achieve by setting up a Family Trust?
   You need to decide on your priorities in respect of wealth preservation, succession planning, tax optimisation, asset protection or family governance
2. Who do you wish to ultimately benefit from the Family Trust and under what circumstances?
   Are you clear about whether the trust is purposed for your own interests, for current or future family members or for charitable causes?
3. How much control are you willing to give up now to ensure stability for tomorrow?
   Are you truly comfortable letting trustees make decisions according to the trust deed and any guidance you have provided by way of a letter of wishes?
4. Are family conflicts likely be prevented — or triggered — by how the Family Trust is structured?
   Have you considered issues of fairness and managing expectations among heirs?
5. Is the Family Trust sufficiently flexible to adapt to future changes in regulations, family dynamics or asset values?
   Does the trust allow for mechanisms like protectors, powers of appointment or the ability to amend?
6. Who should serve as the trustees of the Family Trust?
   The trustees have the fiduciary responsibility to act in the best interest of the trust’s beneficiaries, while carrying out the wishes of the donor. You need to examine the merits of individual or professional trustees and assess if they will be capable, objective, cost-effective and future-proof?
7. Have you properly considered the choice of jurisdiction for your Family Trust and what could happen if political, legal or tax regimes change?
   Is the chosen jurisdiction politically, economically and socially stable, is it considered of good reputation and is it aligned with your family’s long-term interests?
8. How transparent should the Family Trust arrangements be to beneficiaries during your lifetime?
   Should any or all your beneficiaries be informed about the trust deed and the trust governance structure now, later or never?
9. What are the real costs in respect of set up fees, ongoing administration, reporting and compliance?
   Are you prepared for the time, attention and costs that a trust will consume over decades?
10. What is your preferred legacy beyond simply the assets and how can the Family Trust reflect your values, aspirations and objectives?
    Is the trust purely a financial mechanism, or do you also want to also encourage education, hard work, entrepreneurship, philanthropy, family life or family leadership?

Why Is Singapore a Leading Jurisdiction for Family Trusts?

Once the decision to set up a Family Trust has been made, the next question is where? Singapore stands out as a leading trust jurisdiction worldwide for the following reasons:

• Political and economic stability – Singapore consistently ranks among the world’s most politically and economically stable countries, making it a safe haven for long-term family planning.
• Strong legal system – Singapore has a trusted, transparent legal framework based on English common law that offers confidence and familiarity to international families.
• Modern, flexible trust laws – the Singapore Trustees Act has established Singapore as a jurisdiction of choice for wealth structuring and business, and includes specific provision for the settlor to reserve the powers of investment and asset management without invalidating the trust.
• Attractive tax regime – Singapore-resident trusts offer various tax benefits. Income earned inside Singapore is taxed on the trustees but if the settlor and beneficiaries are all non-Singapore resident, full exemption from Singapore taxation may be granted to foreign income allowing for frictionless deployment of capital for investment. There are no capital gains or inheritance taxes.
• Deep professional sector – Singapore boasts a sophisticated ecosystem of regulated professional trustees, private banks, wealth advisors, and legal and accountancy experts.
• International connectivity – located at the heart of Asia, Singapore offers excellent access to families across the Asia-Pacific region, including Indonesia, Malaysia, Thailand, India, China, and the Philippines.
• Privacy and confidentiality – unlike companies, the trust deeds and beneficiary details are not publicly registered, ensuring a high degree of confidentiality for Family Trusts.
• Access to global investment opportunities – Family Trusts can tap into Singapore’s dynamic financial markets, private equity funds, real estate and other sectors.
• Family Office synergy – families setting up private trusts often combine them with Singapore family offices, enabling them to benefit from key tax incentives, such as the Section 13O and 13U schemes which provide tax exemption to fund vehicles that are managed by Singapore-based fund managers.
• Forward-thinking regulatory environment – Singapore’s regulators are proactive, balancing innovation with strong governance and international compliance. This attitude provides reassurance to families that Singapore structures will remain robust and compliant into the future.

Why Does the Choice of Trustee Matter for Long-Term Protection?

Choosing the right trustee(s) is a crucial part of setting up a trust because trust law imposes strict obligations and rules on trustees. Corporate trustees that are appropriately licensed, like Sovereign, are held to a standard of providing responsible ethical conduct, careful exercise of discretionary powers, competent investment management, expertise in tax and legal matters, and continuity in the administration of the trust for its duration.

Sovereign is fully licensed to act as professional trustee in both Singapore and Hong Kong, which are both conveniently located for families in the Asia-Pacific region, but also in the leading European trust jurisdictions of Guernsey, the Isle of Man, Gibraltar, Malta and Cyprus.

The post Do You Need a Family Trust and Is Singapore the Right Jurisdiction? appeared first on The Sovereign Group.

The Monetary Authority of Singapore (MAS) issued, on 8 April, a consultation paper in respect of proposed amendments to its anti-money laundering and countering the financing of terrorism (AML/CFT) Notices and Guidelines applicable to financial institutions (FIs) and variable capital companies (VCCs). They are due to take effect from 30 June.

In scope FIs include banks, merchant banks, finance companies, payment service providers, direct life insurers, capital markets intermediaries, financial advisers, the central depository, approved exchanges and recognised market operators, approved trustees, trust companies, non-bank credit and charge card licensees and digital token service providers.

MAS proposes to amend the AML/CFT Guidelines to state that the filing of suspicious transaction reports (STRs) should not exceed five business days after suspicion was first established, unless the circumstances are exceptional or extraordinary.

In cases involving sanctioned parties and parties acting on behalf of or under the direction of sanctioned parties, FIs and VCCs should file the STRs as soon as possible and no later than one business day after suspicion was first established.

MAS proposes to set out its supervisory expectations with respect to the controls and processes for timely review of suspicious transactions and mitigation of ML/TF concerns identified, such as the need for FIs and VCCs to identify, prioritise and promptly review concerns of higher ML/TF risks and escalate any such concerns to senior management where necessary.

MAS further proposes to remove the requirement for FIs and VCCs to extend a copy of STRs filed to MAS for information and to replace it with a requirement for FIs and VCCs to extend a copy of STRs to MAS upon request.

MAS proposes to expand the definition of money laundering (ML) to include proliferation financing (PF) and to mandate that FIs and VCCs are to include PF risk assessments in their ML/TF risk evaluations. This aligns with the latest Financial Action Task Force (FATF) Standards, which require FIs and designated non-financial businesses and professions to identify, assess, understand and mitigate PF risks.

In respect of trusts, MAS proposes to amend the wording of MAS Notice TCA-N03 to align with the Trustees Act 1967 and anticipated legislative changes following the revised FATF Recommendation 25 regarding beneficial ownership and transparency of legal arrangements such as trusts. These amendments will broaden the definition of a trust relevant party and clarify the requirements for identifying all related parties to a legal arrangement and to collecting relevant information.

The amendments will further mandate the collection of certain information about the trust, such as the full name, unique identifier, trust deed and the purpose for which the trust was established, in line with the FATF’s recommendations.

Other proposed amendments include:

• Clarifying that ML/TF information sources for screening should include relevant search engines used in countries or jurisdictions closely associated with the person screened, and that screening should be conducted in the native language(s) of the person screened.
• Ensuring processes are in place to share customer and related account information across business units, including customer due diligence and source of wealth (SoW) information.
• Providing staff with adequate guidance on identifying indicators of fraudulent or tampered data, documents or information, and ensuring timely application of appropriate ML/TF risk mitigation measures.
• Clarifying the need for corroboration of SoW and source of funds (SoF) that are more material and/or present a higher risk for ML/TF and the assessment of the plausibility and legitimacy of SoW and SoF.
• Clarifying the need to assess whether a further or supplementary STR is warranted when further suspicion is raised.
• Including characteristics of a higher-risk shell company as examples of potentially higher-risk categories.
• Including participation in a tax amnesty programme under examples of suspicious transactions related to tax crimes.
• Replacing references to ‘settlors’ and ‘protectors’ with ‘trust relevant parties’ to reflect the expanded definition and replacing the term ‘trust’ with ‘legal arrangement’ in the guidelines.

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In today’s fast-evolving world, successful Indonesian families face more than just the challenge of preserving their wealth; they also need to inspire their Generation Z heirs to act with purpose and become effective innovators and leaders.

For high-net-worth individuals who want to protect their wealth across generations but also want to ensure it doesn’t negate the work ethic and values that they are trying to instil in their children, an ‘Incentive Trust’ established in a tax neutral overseas jurisdiction with a trusted legal and regulatory framework may be the estate planning tool to consider.

Many people seek to order their affairs by making a will, but the probate process can result in lengthy delays, high administration costs and often tax liabilities. Many people do not want their assets to pass outright to their heirs, whether chosen by them or as prescribed under forced heirship rules, and prefer to make more nuanced arrangements.

The best alternative to a will is to set up a trust during lifetime. A trust is probably the most flexible way of making arrangements of this kind and an Incentive Trust provides a real opportunity to use the trust structure to control the disposition of assets to future generations by instilling responsibility, encouraging ambition and rewarding achievement.

Beyond wealth preservation: using trusts to pass on values

Traditionally, trusts have been regarded to safeguard assets from potential threats – from third parties such as potential creditors or a spouse in a divorce – as well as directing how they are to be used after they have been transferred into trust.

A well-constructed trust can place the right money, in the right hands, at the right time. It offers the flexibility, creativity and control that a will cannot. It allows the settlor to organise their wealth to ensure that they can maximise its effectiveness during their lifetime and beyond.

But for forward-thinking Indonesian families, an Incentive Trust can serve a higher purpose: passing on meaning and not just money.
As with all trusts, Incentive Trusts are legal structures that hold and manage assets for the settlor and their beneficiaries, but with specific requirements for how and when money can be disbursed. They can therefore provide innovative strategies for distributing wealth in line with the settlor’s values, so that beneficiaries can be motivated to achieve beyond their trust pay-outs.

The settlor can specify almost any rules they want, reflecting their desire for their beneficiaries to seek higher education, gainful employment, further charitable causes and live responsibly. They could stipulate a pay-out when a beneficiary graduates, marries, has children, reaches a certain age or sets up a business.

Equally, the heirs of HNWIs have the private resources to do good work or pursue careers that are not necessarily lucrative. The utility and success of Incentive Trusts depend on how they are drafted and family circumstances. They should be written with a degree of flexibility to accommodate changing situations and unintended consequences.

How Incentive Trusts motivate the next generation

• • Encourage entrepreneurial spirit

    Members of Gen Z – loosely, people born from 1995 to 2010 – are true digital natives. According to Stanford’s Centre for Advanced Study in the Behavioural Sciences (CASBS), they are typically self-driven, collaborative and diverse-minded.Contrary to stereotypes of being ‘lazy’, Gen Z is entrepreneurial and adaptive. This presents an opportunity for intergenerational collaboration to foster mutual understanding to bridge the gap between traditional norms and modern approaches.An Incentive Trust could:

    • Provide seed capital for business or social enterprise ventures accompanied by a valid business plan.
    • Include incentive clauses that match funding with milestones or impact.
    • Appoint mentors or advisory boards to support young entrepreneurs.
    • Avoid the entitlement trap by linking distributions to contribution or merit.Example: A trust could allocate USD500,000 for a grandchild’s start-up, but only after they provide a business plan and find an external co-investor, ensuring commitment and validation.

  • Education with a purpose

    To encourage a beneficiary to get the best out of their education, an Incentive Trust can go beyond paying for tuition, materials, living and rent expenses by:

    • Funding global internships or research projects aligned with family values.
    • Offer experiential education, such as cultural exchanges or volunteering.
    • Encourage intergenerational mentoring, where Gen Z heirs learn directly from elders or family council members.Structured correctly, this creates not just career readiness, but character development.

  • Embedding a ‘family ethos’ through the Trust

    Settlors can integrate letters of wishes, family charters and governance principles into the Incentive Trust structure, which will help to convey:

    • The family’s origin story and purpose.
    • Core values such as philanthropy, humility and resilience.
    • Rules around roles, responsibilities and family involvement in business.This turns the trust into a living legacy with a framework for building strong, independent successors.

  • Encouraging Social Responsibility

    A growing number of families are using trusts to support causes that matter to their beneficiaries by including:

    • Philanthropic provisions or dedicated sub-funds.
    • Impact committees to oversee Environmental, Social and Governance (ESG) or charity investments.
    • Trustees can distribute based on measurable social outcomes, not just financial needs.This can give heirs a sense of agency, purpose and pride because they are rooted in a larger legacy.

Why the choice of trust jurisdiction matters

As Indonesian families become more international – with children studying in London, running businesses in Singapore or volunteering in Africa – an overseas (offshore) trust can offer important stability and flexibility to their planning by facilitating:

• The multi-jurisdictional holding of assets (real estate, shares, IP).
• The ability to fund initiatives without probate delays or currency constraints.
• Alignment with local and international tax compliance standards, such as the OECD Common Reporting Standard (CRS).

“Due to Indonesia’s civil law system, the concept of trusts was initially unfamiliar, particularly concerning aspects like beneficial ownership, the transfer of benefits and related taxation issues,” said Brilianto Hadi, partner in the Jakarta office of GHP Law Firm.

“However, increasing investment from common law countries such as Singapore, the UK, Hong Kong and the US, as well as investment from civil law countries that recognise the concept of trusts, like Japan, has increased familiarity with trust structures in Indonesia.

“While Indonesian law has provided a general trust framework supervised by the Financial Services Authority (OJK) since 2023, the creation of Indonesian trusts is pending the issuance of implementing regulations. Therefore, the need for Indonesians to utilise foreign jurisdiction trusts remains,” he added.

There are a number of different countries worldwide that have enacted trust legislation, but the quality and suitability of that legislation can vary. When selecting the best jurisdiction for establishing a trust it is important that it should offer:

• A strong tradition of enforcing trusts.
• An English common law system.
• An established reputation for trust business.
• Modern legislation, including contemporary trust concepts.
• Low or no taxation for trusts.

Choosing the right trustee for long-term stewardship

An individual or firm entrusted with the duty of managing assets placed in trust is a trustee. Choosing the right trustee(s) is a crucial part of setting up a trust because trust law imposes strict obligations and rules on trustees.

A trustee must follow the trust deed and is subject to very strict rules governing the way in which their powers and discretion may be exercised. Trustees must always exercise their powers in the best interests of the beneficiaries of the trust and must act prudently in the management of trust property.

Corporate trustees that are appropriately licensed, like Sovereign, are held to a standard of providing responsible ethical conduct, careful exercise of discretionary powers, competent investment management, expertise in tax and legal matters, and continuity in the administration of the trust for its duration.

Sovereign is fully licensed to act as professional trustee in both Singapore and Hong Kong, which are both conveniently located for Indonesia, but also in the leading European trust jurisdictions of Guernsey, the Isle of Man, Gibraltar, Malta and Cyprus.
From wealth to wisdom

Indonesian families have long succeeded through vision and tenacity, but as wealth transfers from the original founders to their heirs, the greatest risk is not losing money but losing motivation. By leveraging a trust for incentive-driven empowerment, families can ensure their legacy is not only sustained, but expanded by the next generation.

The post How Incentive Trusts Help Indonesian Families Inspire the Next Generation appeared first on The Sovereign Group.

According to McKinsey analysis, between 2023 and 2030, ultra-high-net-worth (UHNW) families with personal financial assets more than USD50 million and high-net-worth (HNW) families with personal financial assets between USD1 million and USD50 million in the Asia–Pacific region are set to undergo an intergenerational wealth transfer estimated at USD5.8 trillion. UHNW families are expected to account for about 60% of the total wealth transfer.

The 2025 Wealth Report from Knight Frank puts the number of HNWIs in Malaysia with personal financial assets of more than USD10 million at 7,490, just behind Indonesia, Thailand and Singapore.

Effective succession planning is crucial for preserving wealth and ensuring a smooth transition of assets across generations. But legacy planning is more than just arranging your finances; it’s about safeguarding your family’s future, ensuring continuing prosperity and passing down your values alongside wealth.

For wealthy individuals seeking control over how their capital is used or protected for future generations, it is essential to instil some sense of values or purpose at the outset. Trusts are among the most powerful tools in legacy planning.

Trusts can provide a number of guardrails, both for investment professionals and future generations. The trustees must ensure that the assets are used according to the settlor’s wishes and must always act in the interest of the beneficiaries.

These protections can be further strengthened using a private trust company (PTC) that can serve as trustee of a single trust or a group of related trusts. Family members can participate in the management of the PTC and therefore in the decisions that need to be taken by the PTC as trustee, including decisions relating to the control and management of companies owned by the trustee.

In this guide, we explore why Malaysians set up trusts and the best jurisdictions for doing so.

Key Reasons for Malaysians to Use Trusts

1. Estate planning without probateThe probate process can result in lengthy delays, high administration costs and tax liabilities. The best alternative is to set up a trust during lifetime. Trusts offer confidential, efficient wealth transfer without court involvement or dependence on a will.
2. Asset protectionIf assets are transferred to a trust, they will no longer form part of the settlor’s estate and will be shielded from future creditors, lawsuits or divorce settlements. This could be especially useful for entrepreneurs and professionals with complex financial exposures.
3. Business continuity
   Holding family business shares in trust can prevent the unnecessary liquidation of a family company on the founder’s death and ensures stable management even if heirs are inexperienced or in disagreement.
4. Tax efficiency and futureproofing
   Although Malaysia does not currently impose estate duty or capital gains tax, placing assets into trust can protect them against future changes. Offshore trusts can offer may offer substantial global tax efficiencies.
5. Caring for vulnerable beneficiaries
   Trusts are a useful vehicle for people who want to provide independent support to those who are unable to manage their own affairs, such as infant children, the aged, the sick or disabled.
6. Confidentiality
   Proving a will is a public procedure. The only other legal form of transfer is via a trust, which remain private, keeping wealth and family matters confidential.

Preferred Jurisdictions for Malaysian Trusts

The residence status of a trust is generally determined by that of its trustees. The taxation of trusts depends on a variety of factors, including the tax profile of the settlor and the beneficiaries and the tax profile of the trust itself.

An offshore trust may provide shelter from some taxation, but they can also offer the opportunity for the roll up of potentially tax-free capital gains and income, for reinvestment by the trustees. There can also be non-tax advantages, including asset protection, succession planning and more confidentiality as compared to a domestic trust.

1. Singapore – most popular choice

Singapore is a top trust jurisdiction for Malaysian families because it offers:

• Political and economic stability.
• Strong, familiar common law legal system.
• Modern trust legislation that includes a settlor’s ‘reserved power over investments.
• Access to leading international trust companies and banks.
• Proximity and ease of administration.
• Ability to hold Malaysian and global assets (via holding structures).

2. Labuan – Onshore legitimacy, offshore benefits

Labuan International Business and Financial Centre (IBFC), Malaysia’s domestic offshore financial hub, is increasingly popular for HNWI Malaysians because it offers:

• Trusts governed by common law that can be applied in an Islamic manner if they subscribe to Shariah principles.
• Malaysian residents can place international assets into a Labuan trust. Malaysian property requires the approval of the regulator, Labuan FSA.
• A Labuan Special Trust (LST) can be used to hold shares in a Labuan holding company, which in turn may own assets. This creates a separation between the custodian role of the trustees and the management of the company which is the responsibility of the directors only. The LST can be used for succession planning, commercial purposes and matrimonial settlement.
• The rate of tax is 3% of audited net profits. Distributions made by a Labuan trust to the beneficiaries are tax-exempt.
• Greater privacy than domestic Malaysian structures

3. International options – Hong Kong, Guernsey and Gibraltar

The residence status of a trust is generally determined by that of its trustees. For clients with global investments and multi-jurisdictional assets, international wealth structuring requires careful legal planning, including the use of offshore trusts in international financial centres:

• Hong Kong’s trust regime was comprehensively modernised by the Trust Law (Amendment) Ordinance 2013, which introduced new provisions to enhance protection for beneficiaries and to provide settlors with reserved powers in respect of investment or asset management functions.Further changes provided statutory protection from foreign laws of inheritance – such as forced heirship rules – and abolished the previous rules against perpetuities and excessive accumulations of income to encourage settlors to establish perpetual trusts.
• Guernsey is at the forefront of best practice development in trusts and was one of the first jurisdictions to introduce the regulation and supervision of trust companies. If all beneficiaries are resident outside of Guernsey, a trust will be exempt from both Guernsey income tax on income arising outside Guernsey and income on bank deposit interest arising from within Guernsey.A trustee can therefore make distributions out of a trust fund established in Guernsey without any withholding or deduction of Guernsey income tax. There are no inheritance, wealth, gift or capital gains taxes levied in Guernsey. Guernsey trusts provide statutory protection from foreign laws of inheritance – such as forced heirship rules.
• Known for its robust regulatory framework and attractive tax environment, Gibraltar is a leading destination for individuals and corporations seeking to protect and grow their wealth. A Gibraltar trust that has non-resident beneficiaries is not subject to tax in Gibraltar, and all its non-Gibraltar source income can be accumulated free of tax in Gibraltar.Asset protection trusts have been given statutory recognition and protection, and the Trusts (Private International Law) Act 2015 introduced ‘firewall’ legislation restricting the application of foreign laws and judgments, particularly on forced heirship.

How Do Singapore Trusts Work with Shariah Law?

Muslim Malaysians face additional complexity due to ‘faraid’, the Islamic inheritance framework, which prescribes fixed proportions for heirs. Trusts can offer the following key advantages:

• Irrevocable lifetime (inter vivos) trusts – transfer ownership while alive to avoid probate and faraid.
• Insurance-linked trusts – may be treated differently under Islamic principles.
• Trusts for non-Malaysian assets – may be less susceptible to local legal challenges.

Risks:

• Revocable trusts may be seen as estate planning loopholes and can be contested.
• Malaysian courts may assert jurisdiction over Malaysian-domiciled individuals and assets.
• Heirs can challenge trusts that sidestep faraid distribution.

Best practice:

• Use cross-border legal experts familiar with Malaysian Shariah law and Singapore trust law.
• Consider Shariah-compliant trust structures for religious harmony and legal resilience.

Plan Ahead, Structure Carefully

Malaysian HNWIs use trusts to control, protect and pass on their wealth, adapting to religious, legal and global realities. Whether it’s a Singapore trust for global assets, a Labuan foundation for tax neutrality, or an offshore structure (Hong Kong, Guernsey or Gibraltar) for multinational planning, the right set up will depend on your unique situation.

Sovereign advises on cross-border estate planning and will balance legal, tax and governance considerations to achieve compliance with diverse legal frameworks and ensure that succession strategies minimise disputes while securing financial stability for future generations.

Our expertise covers structuring offshore trusts, private investment companies and family holding structures to facilitate seamless wealth transfer across borders. For family-owned businesses, we also provide tailored succession strategies to facilitate transitions and ensure business continuity.

Effective succession planning is crucial for preserving wealth and ensuring a smooth transition of assets across generations. Start to plan early so that the legacy you have built can continue to shape the freedom and security of generations to come.

The post Why Malaysians Set Up Trusts and Where Is the Best Place to Do So appeared first on The Sovereign Group.

To mitigate higher costs, businesses will receive a 50% corporate income tax rebate for Year of Assessment (YA) 2025. Any company that employs at least one local employee will further receive a minimum benefit of SGD2,000. The total benefits will be capped at SGD40,000.

To maintain Singapore’s competitive advantages into the future, a number of new initiatives were announced:

• Global Founder Programme: the Economic Development Board will launch a new programme in 2025 to encourage more global founders to anchor and grow new ventures in Singapore.
• National Productivity Fund (NPF) top up: Singapore will set aside an additional SGD3 billion to attract more multinational enterprises through the NPF, which supports productivity improvements and training.
• Investment in R&D infrastructure: the Singapore government will invest SGD1 billion in infrastructure including the public biosciences and medtech research sector and developing a new national semiconductor R&D fabrication facility.
• Enterprise Compute Initiative: the government has set aside SGD150 million to provide eligible enterprises with priority access to major cloud service providers to access artificial intelligence (AI) tools, computing power and expert consultancy services.
• Private Credit Growth Fund: the Minister for Trade and Industry will announce that more financing options for high-growth local enterprises will be provided by introducing a new SGD1 billion Private Credit Growth Fund.

Initiatives for Business Growth

Budget 2025 also saw funds set aside for grants and schemes to encourage the growth of Singaporean SMEs locally and overseas. Among these include:

• Double Tax Deduction for Internationalisation (DTDi) scheme: the DTDi scheme, which allows businesses to claim a tax deduction of 200% on qualified market expansion and investment development expenses, is extended from 31 December 2025 to 31 December 2030.
• Market Readiness Assistance (MRA) grant: the MRA assists Singapore businesses to expand into new markets by defraying costs of overseas set-up, marketing and business development. The grant cap has been extended SGD100,000 per new market, and the scheme will be from 31 March 2025 to 31 March 2026.
• Mergers and Acquisition (M&A) scheme: the M&A scheme will be extended from 1 April 2025 to 31 December 2030. It allows eligible businesses to claim an M&A allowance based on 25% of up to SGD40 million of the value of all qualifying acquisitions in each assessment year (YA), and a 200% tax deduction on costs incurred, with an expenditure cap of SGD100,000, per assessment year.
• Enterprise Financing Scheme (EFS) scheme: the EFS, which gives Singapore enterprises improved access to financing across all stages of growth, will be enhanced by increasing the maximum loan quantum under for EFS – Trade Loan from SGD5 million to SGD10 million and extending the scope of the EFS – Mergers and Acquisitions Loan scope from equity acquisitions to support targeted asset acquisitions from 1 April 2025 to 31 March 2030.

Incentives for the Equities

Following the recommendations of the Equities Market Review Group, Singapore will introduce three new tax incentives to encourage new listings and strengthen the development of its equities market, as follows:

• Listing Corporate Income Tax (CIT) Rebate: new corporate listings in Singapore could qualify for a 10% or 20% CIT rebate, with a cap of either SGD3 million per YA for qualifying entities with market capitalisation of less than SGD1 billion to SGD6 million per YA for qualifying entities with market capitalisation of at least SGD1 billion. The award will be open until 31 December 2027 and will stand for five years per qualifying entity, non-renewable.
• Enhanced Concessionary Tax Rate (CTR): new fund manager listings in Singapore could qualify for a CTR of 5% under the Financial Sector Incentive-Fund Managers (FSI-FM) scheme. The award will be open until 31 December 2028 and will stand for five years per fund manager, non-renewable.
• Tax exemption for fund managers: qualifying incomes of fund managers from funds investing in Singapore-listed equities could qualify for corporate tax exemption under the FSI-FM. The award will be open until 31 December 2028 and will stand for five years per fund manager, non-renewable.

Further measures were announced to deepen trading liquidity and strengthen capabilities in the local fund management and equity research ecosystem:

• The Monetary Authority of Singapore (MAS) and the Financial Sector Development Fund (FSDF) to launch a SGD5 billion Equity Market Development Programme (EQDP) to invest with selected fund managers with capabilities to implement investment mandates with a strong focus on Singapore stocks. MAS will start the process of evaluating eligible fund managers and strategies over the next few months.
• An adjustment to the Global Investor Programme (GIP) to support more capital inflows into Singapore-listed equities. Currently, GIP applicants investing under the Family Office option are required to establish a Single Family Office (SFO) with assets under management of at least SGD200 million, of which at least SGD50 million must be deployed into qualifying investment categories consisting of listed equities/REITS/business trusts, qualifying debt securities, Singapore-distributed funds and non-listed Singapore-based operating companies. Going forward, for new GIP Family Office applicants, the qualifying investment categories will be narrowed to equities listed on approved Singapore exchanges.
• Expansion of the Research Development Grant Scheme under the MAS Grant for Equity Market Singapore (GEMS) to build a ready investor base, sharpen focus on mid- and small-cap enterprises, and broaden research dissemination including via new media channels. MAS and the Singapore Exchange (SGX) will release further details around mid-2025.

Other Tax Incentives

• Enhancement and extension to Section 13W of the Income Tax: to improve the tax treatment of investments, the following changes will apply to disposal gains derived on or after 1 January 2026:
  • Removal of the sunset clause, making the scheme permanent.
  • Expansion of qualifying gains to include gains from the disposal of preference shares accounted for as equity.
  • Group-based assessment of shareholding threshold conditions.
• Enhancement and extension to Employee Equity-Based Remuneration (EEBR) schemes: currently, companies are only allowed deductions for treasury shares or previously issued shares of the company or the holding company that are transferred to employees under EEBR schemes. From Year of Assessment 2026, a new tax deduction will be introduced for payments made to a holding company or special purpose vehicle (SPV) for the issuance of new shares under EEBR schemes, further aligning Singapore’s tax policies with global best practices. The deduction will be the lower of the amount paid by the company and the fair market value, or net asset value of the shares (if the fair market value is not readily available), at the time the shares are applied for the benefit of the employee, less any amount payable by the employees for the shares.
• Enhancement to Cost Sharing Arrangement (CSA) for innovation activities: Currently, payments made under a CSA are not tax deductible under Section 2 if they do not meet the definition of ‘research and development’ expenditure under Section 14C ITA. From 19 February 2025 payments made by companies under an approved CSA for innovation activities will be allowed a 100% tax deduction. The Economic Development Board (EDB) will provide further details in the second quarter of 2025.
• Enhancement and extension for Singapore REITS (S-REITS) and REIT ETFs: to further promote the listing of S-REITs and maintain Singapore’s status as a global REIT hub, the income tax concession for S-REITs and REIT ETFs will be extended until 31 December 2030 and enhanced, providing long-term certainty for investors. Additionally, the GST remission for S-REITs has been extended for the same period to continue supporting the sector’s growth.
• Enhancement and extension to the Land Intensification Allowance (LIA) scheme: the LIA scheme, which allows qualifying companies to claim for qualifying capital expenditure incurred on the construction of a qualifying building or structure, is to be extended from 31 December 2025 to 31 December 2030. To enhance the scheme, the shareholding requirement for building users to be considered related is also to be lowered from 75% to more than 50% for applications made from 1 January 2026.
• Introduction of additional CTR tier of 15% for schemes: Budget 2025 saw the introduction of an additional CTR tier of 15% for the Financial Sector Incentive (FSI), Insurance Business Development (IBD), IBD-Captive Insurance (IBD-CI) and IBD-Insurance Broking Business (IBD-IBB) schemes. This will align with the minimum tax rate under Pillar Two. Further details will be provided by the Monetary Authority of Singapore (MAS) by the second quarter of 2025.

“This was a highly encouraging Budget for Singapore business. The new Global Founder Programme, in particular, promises to be transformative in encouraging global founders to base and grow new ventures in Singapore,” said Andrew Galway, Managing Director of Sovereign Management Services in Singapore.

“This initiative aligns with Singapore’s strategic focus on enhancing its position as a global business hub, attracting talent, investments and innovation. These developments underscore Singapore’s commitment to fostering a dynamic and competitive marketplace, reinforcing its status as a leading financial hub in Asia.”

For any further information or to discuss any aspect of doing business in Singapore, please contact Sovereign by telephone on +65 6222 3209 or by email below.

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The Sovereign Art Foundation’s (SAF) Students Prize made a triumphant return to Singapore after a five-year absence, showcasing the work of outstanding young artists from secondary schools across the city.

Artworks by the 20 finalists went on display at ART SG, Southeast Asia’s leading international art fair, in the Marina Bay Sands Expo and Convention Centre in Singapore from 17 to 19 January. Coinciding with Singapore Art week, the exhibition attracted thousands of visitors, giving our artists valuable exposure.

An awards ceremony was held the final day, when the winners were announced, and financial grants were presented both the artists and their schools.

Joey Chua from Nanyang Girls’ High School received the Judges’ Prize, awarded to the entry with the highest score, for her artwork Sink. Joey received SGD1,400, while her school was awarded SGD3,500.

Chloe Chua Yu Xuan from School of the Arts, Singapore, took the Public Vote Prize, determined by over 500 votes from the public who attended the exhibition or voted online, for her piece Past/Present Tense. Chloe received SGD700, while her school was awarded SGD1,800.

SAF’s Students Prizes are annual awards that celebrate the importance of art in the education system and recognise the quality of artworks produced by secondary-school students across Bahrain, the UK, Gibraltar, Guernsey, the Isle of Man, Cyprus, Malta, Mauritius, Portugal and Singapore.

At the end of the exhibition, the finalists’ artworks were sold off in an online auction, with proceeds split evenly between each student and SAF, which uses the proceeds to fund it charitable work to support disadvantaged and vulnerable children around the world using the expressive arts to support their educational needs and help them develop important life skills.

The selection of the finalists for the Singapore Students Prize and the ultimate winner was made a panel of art professionals comprising Singapore-based artist Boo Sze Yang, art consultant Daryl Goh, SAF co-founder and chairman Howard Bilton, and founder and director of Ttitli Iterations, the Singapore-based art firm dedicating to promoting Madhubani art, Sweta Jha.

In other news, ‘Strides for Good’ campaigners James Eliott-Square and Paris Norris are due to arrive in Cape Town on 28 January to set out for The World Marathon Challenge – an event the involves running seven marathons on seven continents in seven days.

The first marathon is scheduled to begin at Ultima Basecamp (Antarctica) on 31 January and will be followed by marathons in Cape Town (Africa), Perth (Australia), Dubai (Asia), Madrid (Europe), Fortaleza (South America) and Miami (North America).

James and Paris are running to raise funds for SAF and everyone at SAF will be cheering them on! Follow SAF’s Instagram account for further updates!

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The Singapore government gazetted, on 27 November, the Income Tax (Amendment) Act 2024, which implements the tax measures announced in the 2024 Budget Statement in February, as well as changes arising from the Ministry of Finance’s periodic review of Singapore’s income tax regime.

The Act introduces the Refundable Investment Credit (RIC), an expenditure-based grant delivered through the tax system. Companies awarded the RIC will receive tax credits to support their local expenditure in areas such as capital investments, R&D, manpower, and freight and logistics, when they make new investments in high-value and substantive economic activities.

These include the development or expansion of manufacturing facilities, setting up of HQs and services, pursuit of R&D and innovation activities, commodity trading, and decarbonisation.

The tax credits will be offset against corporate income tax payable in the first instance. If the RIC quantum exceeds the amount of taxes paid by the company, the unutilised credits will be refunded to the company within four years from the time the company makes the claim application in respect of the qualifying expenditures incurred.

Another key amendment in the Act is in respect of the Renovation and Refurbishment Scheme (R&R Scheme), which specifically allows a deduction for R&R expenses, up to a cap of SGD300,000 every three years. Generally, R&R expenses are not tax-deductible because they are capital in nature.

The scheme is enhanced in three ways:

• From Year of Assessment 2025, the scope of qualifying expenditure will be expanded to include designer and professional fees.
• The three-year period for determining the expenditure cap for all businesses will be standardised, with the first three-year period being from YA 2025 to YA 2027, instead of commencing when a business makes its first claim.
• Businesses will have a permanent option to claim R&R deductions in one YA, instead of over three YAs, providing more flexibility to manage cashflow.

Also gazetted was the Multinational Enterprise (Minimum Tax) Act 2024, which seeks to implement two new top-up taxes under the OECD’s Base Erosion and Profit Shifting (BEPS) and ensure that Singapore is compliant with the international tax framework.

The Domestic Top-up Tax (DTT) and the Multinational Enterprise Top-up Tax (MTT) will apply from businesses’ financial years commencing on or after 1 January 2025. They will only apply to large multinational enterprise (MNE) groups with annual group revenue of €750 million or more in at least two of the four preceding financial years.

DTT will apply to the Singapore entities of a large MNE group and will be payable if the group’s effective tax rate in Singapore is below 15%. MTT will apply to large MNE groups that are parented in Singapore. If the effective tax rate of the MNE group’s entities in any foreign jurisdiction is below 15%, MTT will be imposed to top up the effective tax rate to 15%.

The Act also provides the Comptroller of Income Tax with the powers to administer, collect, and enforce the DTT and MTT. Offences in the Bill include the failure to keep proper records, tax evasion and obstruction of the Comptroller. These powers and offences mirror those that already exist under the Income Tax Act 1947 and ensure that the Inland Revenue Authority of Singapore (IRAS) has the necessary powers to enforce compliance with the DTT and MTT.

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The Monetary Authority of Singapore (MAS) published, on 6 November, its responses to the feedback on the July 2023 consultation paper that set out a proposed regulatory framework for Single Family Offices (SFOs) operating in Singapore.

SFOs are exempt from licensing under the Securities & Futures Act 2001 (SFA), and the proposals are aimed at harmonising the criteria for a simplified class exemption regime and addressing potential money laundering (ML) risks posed by SFOs.

MAS said the ML risks posed by SFOs were not unlike those posed by other customers in the wealth management segment. Its regulatory and supervisory focus was on ensuring that Singapore financial institutions (FIs) address the ML risks of their customers, including SFOs, as per existing requirements in relevant MAS’ anti-money laundering and countering the financing of terrorism (AML/CFT) Notices applied to all customers.

In recognition that the bulk of transactions are likely to be done through the SFO’s fund vehicle (FV), while transactions done through the SFO itself may be largely administrative in nature, MAS is to extend the requirement to the SFO.

As part of the new simplified class exemption regime, an SFO and its FV in Singapore will be required to open and maintain an account with a MAS-regulated bank. Where the SFO has a foreign-incorporated FV, the FV must open and maintain an account with a MAS-regulated bank in Singapore or with a regulated bank in a jurisdiction that complies with AML/CFT requirements consistent with the standards set by the Financial Action Task Force (FATF).

In finalising the framework for SFOs, MAS’ responses to consultation feedback are as follows:

• Ownership structure of SFOs – MAS recognises that SFOs may operate under various ownership structures. The proposed class exemption is intended to be structure agnostic. Accordingly, an SFO can be held via a trust, foundation or any other structure, so long as the funding for such structures originate exclusively from the family.
• Permissible structures that SFOs can manage monies for – MAS clarifies that an SFO will qualify for exemption so long as the assets managed by the SFO originated from members of the same family. It recognises that family trusts and foundations, managed by the SFO, may also wish to designate charitable organisations as beneficiaries. MAS will permit such arrangements if the beneficiaries do not have control over the trust or foundation assets and are merely persons designated to receive benefits. These charitable organisations may include those not funded exclusively by the family, provided that the SFO is not appointed to manage the assets of the charitable organisations.
• Managing monies of charitable organisations – Under the class exemption, SFOs are exempt from licensing and business conduct requirements that aim to safeguard the interests of third-party customers. Permitting SFOs to manage the monies of charitable organisations that receive donation from third parties would therefore be inconsistent with the rationale under the class exemption. MAS will therefore maintain the stance that SFOs can only manage monies on behalf of charitable organisations exclusively funded by the family.
• Non-family key employees – MAS acknowledges that an SFO may wish for other employees to invest alongside the family for better alignment of economic interests. MAS will therefore expand the definition of key employees to include Executive Directors, Chief Executive Officer, Chief Financial Officer, and investment professionals. To prevent abuse of the SFO regime, however, MAS will impose a limit of 10% on the percentage of AUM that can be attributed to non-family key employees. To enable an SFO to put in place measures to anchor key employees, MAS will also allow key employees to own a non-controlling stake of up to 10% in the SFO. It will provide a one-year time allowance for key employees who cease their employment with the SFO to divest their investments managed by the SFO.
• Definition of family members – To prevent abuse of the class exemption by individuals claiming to be descendants of an extremely remote ancestor, MAS will impose a generational limit that the common ancestor must not be more than five generations back from the youngest generation that established the SFO in Singapore. All family members within five generations can be served by the SFO and subsequent generations can be included. The definition of family members will be expanded to include parents-in-law and siblings-in-law, as well as legally adopted children and stepchildren of the common ancestor.
• Timeline for initial notification – MAS agrees to extend the timeline for initial notification for SFOs under the class exemption to within 14 days after commencement of business in line with the notification requirements imposed on other exempt persons. Currently it is seven days.
• Legal Opinion – As part of the notification, MAS proposes that SFOs obtain a legal opinion supporting their exemption qualification. It will only allow legal opinions furnished by law firms in Singapore.
• Signed declaration – SFOs are also required to furnish a signed declaration to confirm that the family members are currently not the subject of any investigation by authorities, or the subject of any civil or criminal proceedings whether in Singapore or elsewhere. MAS will narrow the scope of disclosure for civil proceedings to proceedings commenced by governmental and regulatory agencies.
• Point of contact – MAS proposes that SFOs must have a designated point of contact between the SFO and MAS. The designated person must be directly employed by the SFO and be resident in Singapore.
• Timeline for annual reporting – SFOs are currently required to submit an annual return within 14 days after the end of each calendar year. MAS will extend the reporting timeline to within four months from the SFO’s financial year end, which is aligned with the tax incentive scheme reporting requirements under Section 13O or Section 13U of the Income Tax Act.
• Information reported in the annual declaration – MAS proposes SFOs to report in their annual return their total assets under management and the name(s) of MAS-regulated FI(s) with which they have established and maintained business relations with as at the end of the calendar year. The SFO and its FVs should list all the MAS-regulated banks that they have opened and maintained accounts with.
• Transitional period – MAS proposed to provide a transitional period of six months for existing SFOs operating in Singapore to comply with the class exemption framework. It will extend the transitional period to 12 months from the effective date of the SFO framework. The existing licensing exemption that an SFO has been relying on will be withdrawn, either upon the filing of the initial notification to MAS, or at the end of 12-month transitional period, whichever is earlier. SFOs that applied for tax incentive under S13O/S13U of the Income Tax Act, and previously furnished a legal opinion to MAS as part of their applications, will need to obtain a new legal opinion with reference to the class exemption.
• Case-by-case exemptions – Once the SFO framework is in place, SFOs will need to meet the qualifying criteria under the class exemption to operate in Singapore. MAS will generally not be granting case-by-case exemptions unless there are exceptional reasons.

“MAS will provide further details on the effective date of implementation, revised legislation and mode of submission for the initial notification and annual return prior to the implementation of the SFO framework,” said Andrew Galway, Managing Director of Sovereign Management Services in Singapore.

“We can enhance the success of family offices in Singapore by fostering strategic partnerships with law firms and other professional service providers, offering seamlessly coordinated solutions tailored to their unique needs. Together, we deliver a comprehensive, efficient, and integrated approach that empowers these offices to thrive in a dynamic global environment.”

For further information, please contact Andrew Galway below.

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