Single Family Office Malaysia

What is a Single Family Office? 

A Single Family Office (SFO) is a private entity established to manage wealth, assets, succession, and related affairs of one family, offering tailored services such as investment management, tax and legal structuring, estate planning, philanthropy, and governance.  

 

Single Family Office in Malaysia 

The Malaysian government has recently introduced the Single Family Office incentive Scheme to attract high-net-worth families and strengthen the local wealth management ecosystem. Under this scheme, a family may set up a Single Family Office Vehicle (SFOV) in the Forest City Special Financial Zone, Johor, and enjoy many tax incentives and benefits.

Source: https://www.sc.com.my/development/single-family-office 

Single Family Office Vehicle (SFOV) 

Single Family Office Vehicle (SFOV) is a new company incorporated 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. In addition, the vehicle has to be operating in Pulau 1 of the Forest City Special Financial Zone and established solely for the purpose of holding assets and investments for the interests of members of a single family. 

 

Single Family Office Management Company (SFO MC) 

The Single Family Office Management Company is a Malaysian company wholly owned, directly or indirectly by the members of a single family and established for the purpose of managing the assets and investments for the interest of members of the single family. 

 

SFO MC Requirements 

Requirements for SFO MC includes all AUM to be managed out of Malaysia by 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). 

Tax Incentives Scheme and Financial benefits 

Tax Incentives, Licensing and Requirements 

Initial 10-year Period 

Criteria	SFOV	SFO MC
Tax Incentives	0% Concessionary tax rate for an initial period of 10 years, with a possible extension of another 10 years.  100% Capital Gains Tax (CGT) exemption upon initial establishment  100% stamp duty exemption upon initial establishment	Special individual income tax rate of 15% for knowledge workers and Malaysians working in Forest City SFZ (FCSFZ)
Form of Legal Entity	Must be a newly incorporated investment holding company in Malaysia  Pre-registration with the SC is required to determine eligibility of the tax incentives	Must be a related company of the SFOV  Must be established and operating in Pulau 1, Forest City SFZ
Licensing	Two-step process for SFO Incentive Scheme Certification:  Consultation with the Securities Commission (SC) and establishment of the SFO  Annual Tax Certification	A fund management license under the Capital Markets and Services Act 2007 (CMSA) is required.  Exemption from licensing subject to consultation with the Securities Commission (SC)
Assets Under Management  (AUM)	Minimum AUM of RM 30 million  Minimum local investment in eligible and promoted investments of at least 10% of AUM or RM10 million (whichever is lower)	All AUM in the SFOV to be managed by the SFO
Substance Requirement	At least 2 full-time employees (1 IP + 1 Director) who is Malaysian tax resident with monthly salary ≥ RM10,000  Physical office in Forest City SFZ ≥ 450sf	At least 1 Investment professional (IP) with monthly salary ≥ RM10,000  Physical office in Forest City SFZ ≥ 450sf
Annual Spending	Incur at least RM500,000 local spending	N/A

 

Subsequent 10-year period 

Criteria	SFOV	SFO MC
Substance Requirements	Minimum four Full Time Employee in SFOV	N/A
Assets Under Management (AUM)	Minimum AUM of RM50 million  Minimum local investment in eligible and promoted investments of at least 10% of AUM or RM10 million (whichever is higher)	Same as Initial Period
Annual Spending	Incur at least RM650,000 local spending	N/A

 

Notes: 

• The 10-year tax holiday and subsequent renewal are subject to compliance with substance and investment conditions. 

• Knowledge workers under the SFO MC may qualify for the 15% individual income tax rate, subject to approval 

• The Securities Commission Malaysia (SC) oversees registration, consultation, and licensing exemptions 

 

Bank Negara 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. 

Under this policy, it allows for SFOVs to have no limit on offshore borrowings, no limit on investments in FCY assets allowing for investments of any amount in FCY assets onshore and abroad, provided that funds for investments are sourced from non-residents or abroad. The example of the eligible sources of funds includes but not limited to: 

1. Offshore borrowing obtained from non-residents 
2. Funds managed on behalf of non-residents originating from abroad 
3. Funds repatriated from abroad by residents 
4. 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 RM50 million per annum for entities with domestic ringgit borrowings) may apply for these flexibilities, as those with smaller annual transaction size 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. 

For more information regarding Single Family Office in Malaysia kindly refer to:  https://www.sc.com.my/development/single-family-office