Assets Under Management Requirement

To be eligible for the above-mentioned income tax incentive, a Single Family Office Vehicle1 (“SFOV”) must satisfy the conditions set out in the Income Tax (Single Family Office Incentive Scheme) (Pulau 1 of Forest City Special Financial Zone) Rules 2025 [P.U.(A) 351/2025] (“Tax Rules”), including those set out in any guidelines issued by the SC2.3
 
The Guidelines set out the additional conditions specified by the SC and the certification requirements relating to the tax incentive. A summary of the main requirements under the Guidelines is set out below.
 
Tax Incentive
 
Certification by the SC for purposes of the tax incentive 

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1) A SFOV that seeks to apply for certification by the SC of the income tax incentive must fulfil the following:

• the qualifying conditions set out in the Tax Rules; and

• the additional conditions set out in Chapter 3 of the Guidelines (discussed below). ​

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Additional conditions 

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2) Country of origin: The SFOV must ensure that the SFOV’s funds and assets do not originate from, nor are owned by nationals or residents of a jurisdiction under FATF’s black list or grey list jurisdictions.

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3) Bank account: The SFOV must open and maintain a bank account with a licensed bank or licensed investment bank. 

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4) Single Family Office Management Company: The SFOV must appoint a Single Family Office Management Company (“SFO MC”) to undertake the management of the SFOV’s assets and investments. The SFOV must ensure that the SFO MC complies with the terms and conditions imposed by the SC at all times. 

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5) Physical office: The SFOV must have a physical and dedicated office set up in the FCSFZ with a minimum of 450 sq. ft., which may only be shared with its SFO MC. 

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6) Initial Assessment period:  

Assets under management requirement

• For purposes of paragraph 6(a)(iii)(B) of the Tax Rules, the SFOV must, at the end of each year of assessment (“YA”), have assets under management (“AUM”) of at least RM30 million, invested in the following permitted assets and investments as set out in Appendix I of the Guidelines (“Appendix I”).

7) Subsequent assessment period

• For purposes of paragraph 6(b)(i) of the Tax Rules, the SFOV must, at the end of each YA, have an AUM of RM50 million, invested in permitted assets and investments as set out in Appendix I. 

• The SFOV must, at the end of each YA, have as part of its AUM composition, RM10 million or 10% of its AUM, whichever is higher, invested in local eligible and promoted investments as set out in Appendix II. 

• The SFOV must have a minimum of four full-time officers who meet the requirements as specified in paragraph 3.11(a) to (c) of the Guidelines. 

• For purposes of paragraph 6(b)(iv) of the Tax Rules, the SFOV must have incurred, at the end of each YA, a minimum of RM650,000 in local operating expenditure which are paid to Malaysian-registered companies or Malaysian-based local service providers. 

Appendix I - List of Permitted Assets and Investments (Local and Global)

1. Shares or securities equivalent to shares that are traded on any exchange*

2. Shares of any company incorporated under the Companies Act 2016

3. Debentures, stocks or bonds issued by any government

4. Shares in or debentures of, a body corporate or an unincorporated body

5. Notes, commercial papers and treasury bills

6. Derivatives traded on a derivatives exchange, or dealt in the over the counter (OTC) market, where the underlying instrument of a derivative is a commodity and is to be settled in cash at all times

7. Placement of domestic and foreign deposits with a licensed bank

8. Interest rate or currency contracts on a forward basis, interest rate or currency options, interest rate or currency swaps, and any financial derivatives

9. Units or shares in collective investment schemes that are managed by an entity which is approved, authorised or licensed by any securities regulator to conduct fund management activities

10. Assets that are managed by a Capital Market Services Licence holder for fund management undertaking portfolio management

11. Foreign venture capital and private equity fund

12. Units in a unit trust fund established in Malaysia and approved or authorised by the SC

13. Islamic capital market products including Shariah-compliant equities, Islamic Collective Investment Schemes (ICIS) and Sukuk

14. Real estate limited to Forest City – residential and commercial properties

15. Any other assets as may be permitted by the SC on a case-by-case basis

* Guidance on the term ‘any exchange’ can be found in Question 16 of the Revised FAQs

• For purposes of paragraph 6(a)(iii)(C) of the Tax Rules, paragraph 3.09 of the Guidelines states that the SFOV must, at the end of each YA, have as part of its AUM composition, RM10 million or 10% of its AUM, whichever is lower, invested in the following local eligible and promoted investments as set out in Appendix II of the Guidelines (“Appendix II”):

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Appendix II - List of Local Eligible Investments ^

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1. Securities listed on Bursa Malaysia Securities Berhad

2. Islamic capital market products including Shariah-compliant equities, Islamic Collective Investment Schemes (ICIS) and Sukuk issued by an entity incorporated in Malaysia

3. Ringgit-denominated debentures and Malaysia Government Securities

4. Exchange traded derivatives listed on Bursa Malaysia Derivatives Berhad

5. Private Equity (PE) funds managed by SC registered PE managers

6. Venture Capital (VC) funds managed by SC registered VC manager

7. Assets under a portfolio management mandate, where at least 70% of the underlying assets is in Malaysia and the mandate is carried out by a Capital Markets Services Licence holder for fund management undertaking portfolio management

8. Shares of companies# incorporated in Malaysia that is under technology based sectors or relating to Sustainable and Responsible Investments (SRI) asset as set out in the table below

9. Any other assets as may be permitted by the SC on a case-by-case basis
    

^  Tokenised capital market products, i.e. using distributed ledger technology (DLT) to create a digital representation of the assets, and digital assets, as defined in the Guidelines on Digital Assets issued by the SC, are excluded and do not form part of the permitted assets.
#   Shares of private companies whose sole business is holding Malaysian immovable properties without any operational business activities are not considered eligible local investments.

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Substance Requirements

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Officer requirement

• Paragraph 3.11 of the Guidelines stipulates that for purposes of paragraph 6(a)(i) of the Tax Rules, the SFOV must have at least two full time officers: (a) who are paid a gross monthly salary of at least RM10,000; (b) who are Malaysian tax residents throughout the YA and are based in the FCSFZ; and (c) one of whom must be an investment professional who has at least two years of relevant working experience and holds at minimum, a degree or a globally recognised professional finance-related certification7. 

• For the first YA, the SFOV is deemed to have complied with the condition requiring employment of two full-time officers where the officers are employed for at least six months before the end of the assessment period. 

• Where any of the officers vacates his position, the SFOV must take the necessary steps to recruit a new officer who fulfils the criteria under paragraph 3.11 within three months from the date of vacancy. 

Operational expenditure requirement

• For purposes of paragraph 6(a)(iii)(A) of the Tax Rules, the SFOV must have incurred, at the end of each YA, a minimum of RM500,000 in local operating expenditure which are paid to Malaysian-registered companies or Malaysian-based local service providers.