KUALA LUMPUR: The Securities Commission (SC) has outlined the requirements for the newly-launched family office incentives at the Forest City Special Financial Zone (SFZ) in Johor.
This scheme will offer benefits for an initial period of 10 years, with the possibility of a 10-year extension, subject to certain conditions.
Forest City will be the first location in Malaysia to provide a zero per cent tax incentive for family offices.
These incentives are exclusive to those who establish and operate a registered office in Pulau 1 at Forest City.
To qualify for the initial 10-year incentive, the single family office vehicle (SFOV) must be a newly-incorporated investment holding company in Malaysia and undergo pre-registration with the SC to determine eligibility for the tax benefits.
The regulator added the management company or SFO2, which is a related company of SFOV, must be set up and operate out of Pulau 1 with at least one investment professional with a minimum monthly salary of RM10,000.
The SFOV must hold assets under management (AUM) of at least RM30 million and meet minimum local investment in eligible and promoted investments of at least 10 per cent of AUM or RM10 million, whichever is lower.
The SFOZ must spend operating expenditure (opex) locally a minimum of RM500,000 annually and employ a minimum of two full-time employees, of whom at least one is an investment professional, with a minimum monthly salary of RM10,000.
Meanwhile, to qualify for the additional 10 years, the SC said the SFOV must hold AUM of at least RM50 million and meet minimum local investment in eligible and promoted investments of at least 10 per cent of asset under management (AUM) or RM10 million, whichever is higher.
The opex must be 30 per cent higher than that of the initial period, which is a minimum of RM650,000 annually.
The SFOV is also required to employ a minimum of four full-time employees.
The SFO or management company may not need to get certain licences under the Capital Markets and Services Act 2007 (CMSA), such as for fund management, as long
as it only provides services for its related corporation, the SFOV, said the SC.
The SC chairman Datuk Mohammad Faiz Azmi said this move taps on the rising trend of family offices globally, providing comprehensive wealth management solutions while leveraging Malaysia's robust regulatory environment.
"Establishing the SFO scheme positions Malaysia to enhance its investor base by attracting regional and Malaysian families to manage their wealth from Malaysia," he said.
"The projected economic multiplier of this initiative from the local substance requirements is estimated to range from RM3.9 billion to RM10.7 billion, which also includes the positive effects on the creation of skilled employment and the demand for other ancillary services," he added.
Eligible SFOVs may apply to the SC for certification for purposes of the tax incentives, subject to the SFOVs demonstrating that it has complied with the relevant conditions.
The SC added that it is currently working with the relevant stakeholders to operationalise the scheme by the first quarter of 2025.