Malaysia’s Family Office Incentives: A Challenge to Singapore?

Malaysia has unveiled a series of incentive packages for the newly founded Forest City Financial Zone (FCSFZ). Among the incentives issued is a zero percent tax rate for the establishment of a single-family office (SFO) in the FCSFZ. This scheme is aimed at being operational by the first quarter of 2025.

Forest City SFZ is the first location in Malaysia that offers a single-family office scheme.  

What is a single-family office?

The SFO Scheme involves the creation of an SFO, a corporate entity wholly owned, directly or indirectly, by one or more individuals from a single wealthy family. The SFO is designed to manage the family’s investments, which are held by a single-family office vehicle (SFOV), and to provide administrative services and other related activities benefiting the family members.

An SFOV, in turn, is a corporate entity also wholly owned by one or more individuals from the same family, established solely for holding the family’s investments.

Single-family office incentives scheme

To participate in the scheme, two wholly-owned companies must be established—an SFO and an SFOV—with physical operations based in Pulau Satu, located in the FCSFZ. The SFOV must also be registered with the Securities Commission Malaysia.

The tax incentive offered under the SFO scheme offers benefits for an initial 10-year period with an option for a 10-year extension, dependent on specific criteria.

Other requirements

Other requirements to qualify for the initial 10-year period include:

• Having assets under management (AUM) of at least 30 million ringgit (US$7.1 million);
• Meet the minimum local investment in eligible and promoted investments of at least 10 percent of AUM or 10 million ringgit (US$2.3 million), whichever is lower;
• Meet the minimum annual local operating expenditure of 500,000 ringgit (US$118,000); and
• Employ a minimum of two full-time employees, one of whom is an investment professional with a monthly salary of 10,000 ringgit (US$2,372).

To qualify for the incentives for an additional 10 years:

• Have an AUM of at least 50 million ringgit (US$11.8 million);
• Meet the minimum local investment in eligible and promoted investments of at least 10 percent of AUM or 10 million ringgit (US$2.3 million), whichever is higher
• Meet the minimum annual local operating expenditure of 650,000 ringgit (US$154,000); and
• Employ a minimum of four full-time employees.

Malaysia’s introduction of family office incentives in the Forest City Financial Special Zone is a strategic move to compete with regional financial hubs like Singapore.

With the appeal of a zero percent tax rate, a 10-year tax exemption, and lower AUM thresholds, this scheme provides cost-effective opportunities for wealthy families to establish single-family offices.

However, Singapore has long established itself as a premier destination for family offices in Asia, with over 1,100 managing assets estimated at S$90 billion (US$69 billion). Singapore’s well-developed financial infrastructure, global connectivity, and tax exemptions under its 13O and 13U schemes make it a leading choice for families seeking stability and comprehensive financial services. The 13U scheme, in particular, caters to large family offices managing assets of S$200 million (US$154 million) or more, while 13O offers similar benefits to smaller entities.

While Malaysia may not yet match Singapore’s scale and maturity in this space, the Forest City incentives position it as a rising player, especially for families seeking lower entry barriers and a growing financial ecosystem. As Malaysia continues to enhance its regulatory framework and infrastructure, it presents a viable alternative for family offices looking to diversify their operations across Southeast Asia.

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