Malaysia Special Economic Zones: Exclusive Tax Incentives to Establish Your Family Office in Malaysia’s Forest City Special Financial Zone
On 20 September 2024, YB Senator Datuk Seri Amir Hamzah Azizan, Finance Minister II, delivered a keynote address at the Forest City Special Financial Zone (FCSFZ) Tax Incentive Announcement Ceremony. The address highlighted the Government’s commitment to fostering investment and positioning Forest City as a competitive financial hub through attractive tax incentives. This initiative is aimed at attracting global Single Family Offices (SFOs) to establish their presence in the region, promoting economic growth and generating high-value employment opportunities.
Following this, on 23 September 2024, the Securities Commission (SC) of Malaysia outlined the Family Office Incentive Scheme, detailing the benefits available to SFOs, particularly those involved in managing substantial family assets. The SC also issued a Frequently Asked Questions (FAQ) document to clarify the mechanics of the Single Family Office Scheme, focusing on eligibility, tax incentives, and operational requirements for family offices seeking to establish themselves in Malaysia. The scheme is designed to attract high net worth families to manage their wealth locally, while supporting the nation’s investment landscape. These initiatives mark a strategic effort to position Malaysia as a leading destination for family offices, leveraging the FCSFZ as a global financial zone.
As recently announced, eligible Single Family Office Vehicles (SFOVs) can benefit from a 0% concessional tax rate on income generated from eligible investments for an initial period of 10 years. This tax incentive may be extended for an additional 10 years, provided the SFOV meets the necessary requirements during the initial period.
This table outlines the key conditions for a Single Family Office Vehicle (SFOV) to qualify for the tax incentive during the initial period.
| Condition | Details |
| New Investment Holding Company | The SFOV must be a newly incorporated investment holding company in Malaysia and seek pre-registration with the SC for tax incentives. |
| Location of Operations | The management company or SFO, associated with the SFOV, must be established and operating in Pulau 1, FCSFZ. |
| Investment Professional | At least one investment professional must be employed, with a minimum monthly salary of RM10,000. |
| Asset Under Management (AUM) | The SFOV must hold at least RM30 million AUM and meet a minimum local investment in eligible investments of at least 10% of AUM or RM10 million (whichever is lower). |
| Annual Operating Expenditure (OPEX) | The SFOV must incur at least RM500,000 in annual operating expenditure locally. |
| Full-Time Employees | The SFOV must employ at least two full-time employees, each receiving a minimum monthly salary of RM10,000, with at least one being an investment professional. |
This table outlines the conditions for SFOVs to qualify for an additional 10 years, which include:
| Condition | Details |
| Asset Under Management (AUM) | The SFOV must hold at least RM50 million AUM and invest a minimum of 10% of AUM or RM10 million in eligible local investments, whichever is higher. |
| Annual Operating Expenditure (OPEX) | The SFOV must incur an annual local operating expenditure of at least RM650,000 (30% higher than during the Initial Period). |
| Full-Time Employees | The SFOV must employ a minimum of four full-time employees. |
As highlighted in the FAQ, the detailed terms and conditions of the Family Office Incentive Scheme will be made available on the SC’s official website by the first quarter of 2025 at https://www.sc.com.my/development/single-family-office. Interested SFOVs are encouraged to visit the website regularly for the latest updates and information. This resource provides comprehensive guidelines on eligibility, compliance, and the specific requirements to qualify for the scheme.
Ang Henn Ann
Tax Partner
ECOVIS MALAYSIA TAX SDN BHD
hengann.ang@ecovis.com.my
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