Malaysia: Forest City Special Financial Zone - New Family Office Incentive Scheme
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On 20 September 2024, the Minister of Finance II introduced a new single family office incentive scheme (“FO Scheme”) as part of a comprehensive package to stimulate economic growth within the Forest City Special Financial Zone (SFZ). The Forest City SFZ is the first region in Malaysia to offer this scheme, aiming to attract family offices and position the zone as a prominent financial and economic center in Southeast Asia.
The FO Scheme provides a 0% concessionary tax rate on income from eligible investments for a fund vehicle (“FundCo”) managed by a single family office (“SFO”). This tax incentive applies for an initial 10-year period, with the possibility of a 10-year extension if specific conditions are met. The Securities Commission Malaysia (SC) will administer the FO Scheme, which is expected to be operational by the first quarter of 2025.
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On 23 September 2024, the SC outlined the conditions for FundCo’s eligibility in a media release and FAQ.
?????????????? 10-???????? ???????????? ????????????????????????:
? ????????????????: Establish and maintain a registered office in Pulau 1, Forest City SFZ.
? ???????????? ??????????????????: Incorporate a new investment holding company in Malaysia and seek SC pre-registration for the tax incentive.
? ???????????????????? ?????????????? ???? ??????: Must be a related entity to FundCo, headquartered in Pulau 1, Forest City SFZ, and employ at least one investment professional with a minimum salary of RM 10,000. Licensing under the Capital Markets and Services Act 2007 may not be required if services are exclusively for FundCo.
? ???????????? ?????????? ???????????????????? (??????): Maintain AUM of at least RM 30 million.
? ???????????????????? ????????????????: Invest at least 10% of AUM or RM 10 million (whichever is lower) locally in eligible investments.
? ?????????????????? ?????????????????????? (????????): Minimum annual OPEX of RM 500,000 incurred locally.
? ??????????????????: Employ at least two full-time staff with a minimum monthly salary of RM 10,000, including one investment professional.
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???????????????????????? ?????? ???? ???????????????????? 10-???????? ???????????? ??????????????????:
? ??????: Maintain an AUM of at least RM 50 million.
? ???????????????????? ????????????????: Invest at least 10% of AUM or RM 10 million (whichever is higher) in eligible local investments.
? ????????: Increase OPEX by at least 30% from the initial period (minimum RM 650,000).
? ??????????????????: Employ a minimum of four full-time staff.
The SC anticipates releasing more detailed conditions for the FO Scheme by early 2025. Although application procedures are still pending, prospective applicants are encouraged to contact the SC to confirm eligibility.
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The FO Scheme is expected to benefit Malaysia’s economy by attracting family offices, potentially increasing capital inflows for domestic investments and stimulating demand for financial services. This could create high-skilled job opportunities locally.
However, for the Forest City SFZ to compete with established jurisdictions like Singapore and Hong Kong, further clarity from the SC is needed—particularly regarding the scope of the tax incentive and its conditions. In addition to the tax concession, factors such as legal security, economic and political stability, and migration prospects will impact the scheme’s attractiveness to high-net-worth families.
To maintain the FO Scheme’s integrity, a rigorous screening process should be implemented to prevent misuse for tax evasion or money laundering. A robust compliance framework and transparent reporting will be essential to safeguard the scheme’s credibility and effectiveness.
"This article in contributed by See Kok Loong"
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2 个月i would like to know how i can be involved
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