Philanthropy tax incentive scheme for family offices – building

Singapore’s philanthropic ecosystem for the region and the future

13 July 2023

Grow | Protect | Operate | Finance

On 5 July 2023, the Monetary Authority of Singapore launched the philanthropy tax incentive scheme (PTIS) for
family offices. Announced in Budget 2023 and effective from 1 Jan 2024, qualifying donors in Singapore would be
eligible to claim 100% tax deductions (capped at 40% of the donor’s Singapore statutory income) for overseas
donations made through qualifying local intermediaries.

Successful qualifying donors of the PTIS would be entitled to an incentive approval period of 5 years from the
approved incentive commencement date. For example, if the qualifying donor’s approved incentive
commencement date is 1 January 2024, the corresponding incentive approval period would be from 1 January
2024 to 31 December 2028.

We highlight key PTIS features below:

Who qualifies as a One (1) qualifying donor who may be a:

qualifying donor?
(i) Single Family Office (SFO) with an approved Section 13O or Section 13U
Incentive Award;
(ii) Ultimate beneficial owner of the S13O or S13U fund;
(iii) Beneficiary of the S13O or S13U fund; OR
(iv) Related family business (e.g. an unlisted corporate entity based in Singapore
and whose largest shareholder belongs to the same family as the UBOs or
beneficiary(ies) of the S13O or S13U fund)

N/B: Approved Qualifying Donor may not be changed during incentive approval period
unless existing Approved Qualifying Donor passes on or becomes ineligible

How do I qualify for At the point of application and throughout its incentive approval period, the SFO of the
the PTIS and (approved) qualifying donor must:
maintain my incentive
approval? (i) Employ a new philanthropy professional (PP)
(ii) Pivot an existing headcount of the SFO; OR
(iii) Engage an external service provider to advise on and manage the philanthropic
activities of the family.

N/B: 6-month in-principle approval may be granted if the SFO is unable to fulfil this
criterion at the point of application

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provide legal or other advice and you should not take, or refrain from taking, action based on its content. Please see dentons.com for legal notices.
 The SFO of the approved qualifying donor must meet two (2) economic conditions in
the financial year (FY) when the overseas donations are made:

(i) Employ an additional local professional headcount (measured relative to the

number of professional headcount holders) within the SFO on the day prior to the
application. This additional local professional headcount requirement may be
deemed fulfilled if the SFO had already employed a PP above.

(ii) Incur an additional S$200,000 in local business spending which should be

measured relative to the local business spending incurred by the SFO in the FY
preceding the date of the application.

What goes towards
calculating the tax
deduction?
100% of overseas donations channelled through qualifying local intermediaries being:
 Selected registered and exempt charities with a valid fundraising for foreign
charitable purposes permit
 MAS-specified charitable institutions and not-for-profit organisations established
by financial institutions in Singapore
 Selected Grantmakers under the Ministry of Culture, Community & Youth’s
Grantmaker Scheme
 Other selected entities, as approved by MAS

If you are looking to qualify for the PTIS as a qualifying donor:

 It would be important to review the status of your S13O or S13U application (e.g. ongoing / completed)
 Determine who should be the qualifying donor who would benefit the most from the PTIS, bearing in mind that
once a qualifying donor is approved, the approved qualifying donor may not be changed during the incentive
approval period unless the original approved qualifying donor has passed or is ineligible
 Consider your existing charitable structuring options and charitable giving pathways
 Consider how the PTIS may affect your tax assessment and tax filing obligations

If you are a charitable entity looking to participate in the PTIS as a Qualifying Local Intermediary

 Review your registration status and assess if you have the relevant permits to facilitate administration of
overseas donations and/or overseas fundraising activities
 Assess your entity’s operations, especially the ability to provide contractual philanthropy advisory services and
ability to facilitate the PTIS (e.g. issuance of PTIS donation acknowledgement receipts to qualifying donors,
making the required submissions to MAS and IRAS)
 Reach out to the relevant government authorities to further dialogue on how you might be able to become a
qualifying local intermediary

The PTIS reflects the government’s clear intention to develop an ecosystem of philanthropic giving linked to family
offices that are established and operating in Singapore, while the requirement for 100% of overseas donations to
be channelled through qualifying local intermediaries in order to qualify for tax incentive would go towards
enhancing the capacities and capabilities of local charities to meet the requirements for overseas philanthropy.

© 2023 Dentons. Dentons is a global legal practice providing client services worldwide through its member firms and affiliates. This publication is not designed to
provide legal or other advice and you should not take, or refrain from taking, action based on its content. Please see dentons.com for legal notices.
We welcome its introduction and look forward to its impact in building up Singapore’s philanthropic capabilities.
We note that Singapore is not the only jurisdiction in the region with a philanthropic tax incentive. In fact, Hong
Kong recently introduced a tax concession regime for family-owned investment holding vehicles (FIHV) and
provided that approved charities in Hong Kong may hold up to 25% beneficial interest as an exception to the
general requirement that the family of a FIHV must hold beneficial interest of 95% in such FIHVs.

While there remains a number of important differences in the requirements and administrative processes for
setting up or operating family offices or engaging in charitable activities, overall we can look forward to the
opportunities that the Singapore PTIS and also the recent Hong Kong changes would provide to a thriving
ecosystem for philanthropy and impact in Asia.

Should you have any questions or would like to further discuss the requirements of the PTIS or related updates,
please do not hesitate to get in touch with any of our key contacts.

KEY CONTACTS

Edmund Leow, SC Vivien Teu Ling Yi Quek Nicole Leong

Senior Partner Partner Partner Senior Associate
Corporate Dentons Hong Kong LLP Corporate Corporate
D +65 6885 3613 D +852 2533 3690 D +65 6885 3766 D +65 6885 3819
edmund.leow@dentons.com vivien.teu@dentons.com lingyi.quek@dentons.com nicole.leong@dentons.com

© 2023 Dentons. Dentons is a global legal practice providing client services worldwide through its member firms and affiliates. This publication is not designed to
provide legal or other advice and you should not take, or refrain from taking, action based on its content. Please see dentons.com for legal notices.