Introduction
On March 15, 2024, the Monetary Authority of Singapore (“MAS”) announced changes to the application process for the S13O and S13U tax incentive schemes for single-family offices (“SFOs”). Notable changes to the application process include MAS consolidating the old Annex A and Annex B stages and requiring all necessary information to be prepared for submission before a 13O/U application can commence
under the new processing regime.

As Singapore becomes increasingly popular among high-net-worth individuals as their preferred base for setting up SFOs, with 1,400 SFOs established and awarded tax incentives by MAS by the end of 2023,
these changes aim to streamline the overall application process. This not only provides more certainty regarding processing time but also gives applicants a clearer understanding of expectations before
commencing the application.

Key Changes – Old vs. New Processing Regime by MAS:
The changes will only affect the processing regime of S13O and S13U tax incentive applications submitted to MAS from 15 March 2024, onwards as well as existing S13O/13U applications who opt to resubmit under the new application process, while the conditions announced as of 5 July 2023, remain unchanged.

What Happens to Pending SFOs Applications?

MAS has also announced that all existing SFOs applications must choose between remaining under the old email processing track or swapping to the new processing regime by April 28, 2024, or else the application will be invalidated and must be restarted under the new processing regime and current 13O/U conditions. This primarily applies to cases that have yet to submit Annex B documents or are still at the Annex A stage. MAS encourages fund applicants to switch to the new processing regime, with conditions still pegged to those in force when the Annex A was originally submitted via email.

Additionally, MAS indicated that applicants will be given a maximum of one month³ to reply to their officer-in-charge when additional information is requested. Failure to meet the deadline will result in applications being invalidated and must be restarted under the new processing regime and current 13O/U conditions. Tightening procedures such as turnaround time from applicants will attract high-net-worth individuals or families seeking to use Singapore as a legitimate wealth management hub while deterring applicants looking to exploit the city’s financial hub position to hide unlawfully acquired wealth.

A glance at the preparatory tasks required prior to commencing the 13O/13U application includes the following:

1. Incorporating the Fund Company and the Fund Management Company.
2. Opening the Fund Company’s Singapore Private Bank Account.
3. Recruiting Designated Investments Professionals (“IPs”).
4. Ensuring IPs complete their Employment Pass (“EP”) formalities to obtain hardcopy EP cards from the Ministry of Manpower (“MOM”). Previously, the primary challenge has been opening the Fund Company’s private bank account, which typically takes 3 months or more due to rigorous Know Your Customer (“KYC”) and Anti-Money Laundering (AML) checks. However, recent experiences have highlighted recruiting IPs from the local market as a significant hurdle, particularly since MAS introduced the requirement of hiring at least 1 non-family member as the IP of the SFO. If you or your clients need assistance, our working partner, SMTP Consult Pte Ltd, a MOM licensed recruitment agency can assist. They have assisted numerous SFO clients with their IP recruitment needs.
Contact details can be found at www.smtpconsult.com.

SMTP’s experience
As a private client firm, SMTP has helped many clients set up SFOs and successfully apply for tax incentives schemes over the years. The firm has years of experience in helping clients meet the requirements to get approval for the S13O or S13U incentive award so that the SFOs can benefit from statutory tax exemptions. Our Immigration and Family Offices department also has a wealth of experience in Employment Pass applications and renewals for investment professionals that are employed by the SFO. Our lawyers work closely with clients and their advisors, adopting a tailored approach to address families’ specific needs and requirements.

Should you or your clients require any assistance or advice, please feel free to contact our Business Development Team to schedule a consultation.