SINGAPORE Law and Practice Contributed by: Sim Bock Eng, Josephine Choo, Aw Wen Ni and Vincent Ho, WongPartnership LLP
Section 13U (also known as the Enhanced-Tier Fund Tax Incentive Scheme) provides for an exemption of income arising from funds managed by a fund man - ager in Singapore. In addition, the Monetary Authority of Singapore (MAS) has adopted a “light-touch” regime with family offices. Single family offices may generally avail themselves of an exemption from holding a capital market services (CMS) licence; other entities that engage in the regu - lated activity of fund management would otherwise have to apply for a CMS licence from MAS. As of September 2024, 1,650 family offices had been awarded tax incentives by MAS, up from 1,400 at the end of 2023. Individuals who establish a Singapore-based fam - ily office with assets under management of at least SGD200 million, of which at least SGD50 million must be invested in certain investment categories within 12 months, are also eligible for permanent residency through the GIP. Update to the Framework for Single Family Offices On 6 November 2024, MAS published a consultation response to the consultation paper dated 31 July 2023 setting out a proposed framework for single family offices (SFOs) in Singapore, to harmonise the licens - ing criteria for SFOs and to introduce new notification and reporting requirements to better monitor SFOs operating in Singapore. To operate in Singapore, an SFO must meet certain criteria in relation to, inter alia, ownership of the SFO, fund management, incorporation of the SFO and busi - ness relations with MAS-regulated financial institu - tions. SFOs will be required to notify MAS of their ability to comply with the qualifying criteria under the proposed class exemption within the prescribed time period, and must submit an annual return within 14 days after the end of each calendar year to report their total assets under management and the name(s) of MAS- regulated financial institutions with which the SFO has established and maintained business relations.
Further information relating to the effective date of implementation of this proposed framework is antici - pated, with existing SFOs operating in Singapore having a transitional period of one year in which to comply. Family Charter Increasingly, there is also interest in a family charter or family constitution that sets out the values of the family and the thinking and wishes of the patriarch and/or the family in the succession structure. Such charter or constitution is usually not a legally bind - ing document, with the intention being only to inform and persuade future generations as to the rationale of the succession structure. However, to the extent that such document provides for dispute resolution mechanisms, these should be made legally binding in order to achieve the intended effect. 4.3 Transfer of Partial Interest Where there is a transfer of interest, the fair market value is used to ascertain the value of that interest, for purposes of determining the applicable tax. There is no market practice as to whether and what, if any, discount would be made against the fair market value where the transfer is only of a partial interest in the asset (eg, a minority stake in a company or a half inter - est in a real property). For valuation purposes, the fact that the transfer is of a partial interest can be noted without any adjustments to the fair market value. In most instances, the adjustment would be a matter of negotiation between the parties. Whilst wealth disputes invariably arise between fam - ily members, the form that they take in court varies greatly. Family Set-Up Trusts A number of cases in Singapore have arisen from the context in which the trusts were set up, with the fol - lowing examples: • in Re BKR [2015] 4 SLR 81, the dispute was between the children of the settlor, regarding 5. Wealth Disputes 5.1 Trends Driving Disputes
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