Single family office Malaysia
The Malaysian government has recently introduced a single family office incentive scheme to attract high net worth families and strengthen the local wealth management ecosystem. Under the scheme, a family may establish a single family office vehicle in the Forest City Special Financial Zone, Johor, and enjoy various tax incentives and benefits. The Ecovis experts explain how companies can use this new facility in Malaysia.
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Single family office vehicle
The single family office vehicle (SFOV) is a newly incorporated company under the Companies Act 2016 which is wholly owned, directly or indirectly, by one or more individuals, all of whom are members of a single family. The SFOV must operate in Pulau 1 of the Forest City Special Financial Zone (FCSFZ) and be established solely for the purpose of holding assets and investments for the benefit of members of that single family.
Single family office management company
A single family office management company (SFO MC) is a Malaysian company wholly owned, directly or indirectly, by members of a single family, and established to manage the assets and investments of that family.
What is a single family office?
- A single family office (SFO) is a private entity established to manage the wealth, assets, succession, and related affairs of one family. It offers tailored services such as investment management, tax and legal structuring, estate planning, philanthropy, and governance.
SFO MC requirements
Operating an SFO MC requires all assets under management (AUM) to be managed out of Malaysia by the SFO MC and SFOV. Although investment for the 90% of the AUM can be done overseas, it must be managed with or by related companies and can be delegated to fund managers licensed by the Securities Commission (SC).
“We support companies in setting up a single family office.”
Yin Lai Pat, Managing Partner, Chartered Certified Accountant, Licensed Auditor, Tax Consultant, ECOVIS Malaysia, Kuala Lumpur, Malaysia
Tax incentives, licensing and requirements: Initial 10-year period
| Criteria | SFOV | SFO MC |
| Tax incentives |
|
Special individual income tax rate of 15% for knowledge workers and Malaysians working in the FCSFZ |
| Form of legal entity |
|
|
| Licensing | Two-step process for SFO incentive scheme certification:
|
A fund management license under the Capital Markets and Services Act 2007 (CMSA) is required.
|
| AUM |
|
All AUM in the SFOV to be managed by the SFO |
| Substance requirement |
|
|
| Annual spending | Incur at least MYR 500,000 local spending | N/A |
Requirements for the subsequent 10-year period
| Criteria | SFOV | SFO MC |
| Substance
requirements |
Minimum four full time employees in SFOV | N/A |
| AUM |
|
Same as initial period |
| Annual spending | Incur at least MYR 650,000 local spending | N/A |
Central Bank flexibility on foreign exchange policy
In addition to tax incentives, the Central Bank of Malaysia (Bank Negara Malaysia) provides foreign exchange administration flexibilities tailored to facilitate cross-border capital flows. These flexibilities are granted for an initial five-year period, renewable subject to compliance.
This policy allows SFOVs to have no limit on offshore borrowings and no limit on investments in foreign currency (FCY) assets. This allows for investments of any amount in FCY assets onshore and abroad, provided that funds for investments are sourced from non-residents or abroad. Examples of the eligible sources of funds include but are not limited to:
- Offshore borrowing obtained from non-residents
- Funds managed on behalf of non-residents originating from abroad
- Funds repatriated from abroad by residents
- Capital injection received from non-residents
It is important to note that only family offices planning to actively invest abroad beyond the standard permissible limit (currently MYR 50 million per annum for entities with domestic ringgit borrowings) may apply for these flexibilities, as those with smaller annual transactions can already invest abroad within the current limit.
Conclusion
The introduction of single family office (SFO) incentives in Malaysia reflects the government’s commitment to positioning the country as a competitive wealth management hub in the region. By offering attractive tax exemptions, foreign exchange flexibilities, and a clear regulatory framework, Malaysia provides high net worth families with a secure and efficient platform to manage, preserve, and grow their wealth across generations. However, SFOs must also ensure strict compliance with the stipulated requirements on structure, operations, and reporting to fully enjoy these benefits. With the right governance and planning, establishing an SFO in Malaysia can be a strategic choice for families seeking wealth sustainability.
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