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:

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.

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.