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Single Family Office tax incentives legislated
The creation of the Forest City Special Financial Zone (FCSFZ) marks a significant milestone in Malaysia’s ongoing efforts to position itself as a regional hub for financial services, high-value services and investment. On 20 September 2024, the Honorable Finance Minister II officially launched the FCSFZ and announced a comprehensive package of incentives to attract global capital, talent and innovation. The incentive framework under the FCSFZ focuses predominantly on two key sectors, i.e., family offices and fintech-related activities.
On 3 October 2025, the following have been gazetted to legislate the incentives relating to Single Family Offices (SFOs). Details of the tax benefits outlined in each of these Orders are set out further below in this alert.
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Income tax incentives |
Special tax rate for SFOs incentive scheme
Capital gains tax exemption
Withholding tax exemption
Others
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Stamp duty exemption and remission |
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Real property gains tax exemption |
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The following terms are defined in the legislation:
“Single family” means a family whose members are individuals who are lineal descendants of a single ancestor and includes the spouse, the biological child, the stepchild and the child adopted in accordance with any written law.
“Pulau 1 of Forest City Special Financial Zone” means Pulau 1, Forest City situated in the Mukim of Tanjung Kupang, District of Johor Bahru, Johor as shown in the Gazette Plan PW50276 deposited in the Office of the Director of Survey and Mapping, Johor.
“Single family fund company” is a company which:
a) Incorporated under the Companies Act 2016 and resident in Malaysia.
b) Is wholly owned, directly or indirectly, by a member of a single family.
c) Operates in Pulau 1 of FCSFZ.
d) Is established solely for the purpose of holding the asset and investment activity for the interest of members of a single family.
A qualifying person operating in Pulau 1 of FCSFZ refers to:
a) A person who is licensed under the Financial Services Act 2013 and the Islamic Financial Services Act 2013.
b) A company which is a holder of a Capital Market Services Licence under the Capital Markets and Services Act 2007.
c) A recognized market operator who is registered under the Capital Markets and Services Act 2007 (excluding individual).
d) A registered person registered under the Capital Markets and Services Act 2007 (excluding individual).
e) A person providing capital market services registered under the Capital Markets and Services Act 2007 (excluding individual).
f) A single family fund company which is verified by the Securities Commission Malaysia (SC).
g) A financial technology company, insurance technology company, regulatory financial technology company or Islamic financial technology company which has been awarded MSC Malaysia Status or Malaysia Digital Status and is verified by Malaysia Digital Economy Corporation Sdn. Bhd. (MDEC).
h) A payment system operator established or incorporated in a foreign jurisdiction approved under the Financial Services Act 2013 or the Islamic Financial Services Act 2013 to operate a payment system in Pulau 1 of FCSFZ.
i) A centralized services entity providing financial global business services which has been awarded MSC Malaysia Status or Malaysia Digital Status and is verified by MDEC.
Income tax incentives
0% income tax rate for up to 20 years:
Income Tax (Single Family Office Incentive Scheme) (Pulau 1 of Forest City Special Financial Zone) Rules 2025 [P.U.(A) 350]
Effective : The Rules are deemed to have come into operation on 1 September 2024.
(Applications received by the SC from 1 September 2024 to 31 December 2034.)
Forest City is the first location in Malaysia to offer a 0% tax rate for family offices and the SC will be responsible to coordinate the SFO incentive scheme. Details of the incentive are as below.
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Incentive |
A single family fund company (approved company) which carries on a qualifying activity under the SFO incentive scheme, will be eligible for: a) 0% tax rate, for the first period of 10 years of assessment (YAs). 0% tax rate, for the subsequent 10 YAs, subject to compliance with additional conditions. |
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Qualifying activity |
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Conditions |
The following conditions are required to be complied with:
Initial period: 10 YAs a) An approved company must employ at least two full-time employees, including one professional investor with a minimum salary of RM10,000. b) The bank deposits must not be used for local investment.[1] c) At the end of the relevant YA, an approved company must satisfy the following conditions:
Extended period: 10 YAs An approved company must satisfy the following enhanced conditions: a) Employ at least four full-time employees. b) Incur a minimum of RM650,000 in annual local operating expenditure. c) Maintain at least RM50 million in AUM. d) Make a local investment of at least RM10 million, or 10% of the AUM, whichever is higher. |
Capital gains tax exemption up until 31 December 2034 on disposal of Malaysian shares to a single family fund company:
Income Tax (Single Family Office Incentive Scheme) (Pulau 1 of Forest City Special Financial Zone) (Exemption) Order 2025 [P.U.(A) 351]
Effective : The Order is deemed to have come into operation on 1 September 2024.
The Order exempts a company, limited liability partnership (LLP), trust body or co-operative society, which is wholly owned, directly or indirectly, by a member of a single family, from income tax on gains or profits from the disposal of unlisted shares in a Malaysian-incorporated company, to a single family fund company.
To qualify for the exemption:
a) The single family fund company shall obtain a certification letter from the SC.
b) The disposal of the unlisted shares must be made to a single family fund company within 12 months from the date of the certification letter in a) above.
c) The disposal of the unlisted shares shall be made between 1 September 2024 and 31 December 2034.
d) The ultimate beneficial owners of both the transferor and the single family fund company must be members of the same single family.
Any loss arising from the disposal of unlisted shares within the period from 1 September 2024 to 31 December 2034 will be disregarded and cannot be set off against income from future disposals of capital assets.
Non-application
The exemption under this Order would not be applicable to:
a) Gains or profits from the disposals of unlisted shares that fall under Section 4(a) of the ITA, as business income.
b) Where a tax exemption has been granted on the share disposal under other subsidiary legislations or by ministerial exemption.
Withholding tax exemptions:
Income Tax (Income of Non-Resident Person) (Pulau 1 of Forest City Special Financial Zone) (Exemption) Order 2025 [P.U.(A) 357]
Effective : The Rules are deemed to have come into operation on 1 September 2024.
Withholding tax exemptions are available on the following payments to non-residents by the qualifying person operating in Pulau 1 of FCSFZ:
Service fees related to the use of property or rights, or the installation or operation of any plant, machinery or other apparatus purchased from the non-residents.
Advice, assistance or services rendered in connection with the management or administration of any scientific, industrial or commercial undertaking, venture, project or scheme.
Rental or payments for the use of movable property under any agreement or arrangement.
Payments classified as gains or profits under Section 4(f) of the ITA, paragraph ”other income” of the non-residents.
The withholding tax exemptions are applicable to income of non-residents received on or before 31 August 2034.
Industrial building allowances:
Income Tax (Industrial Building Allowance) (Pulau 1 of Forest City Special Financial Zone) Rules 2025 [P.U.(A) 359]
Effective : YA 2024 (Applicable to qualifying building expenditure incurred by 31 December 2034.)
The Rules provide that a commercial building constructed or purchased by a qualifying person in Pulau 1 of FCSFZ shall be treated as an industrial building and thus qualify for industrial building allowance, where:
a) The qualifying person owns the commercial building.
b) The commercial building is used by the qualifying person for the purpose of a business activity as specified in the Schedule of the Rules.
The Rules provide for an annual allowance of 10% on the qualifying building expenditure. The qualifying building expenditure must be incurred on or before 31 December 2034.
Deduction for relocation costs:
Income Tax (Deduction of Cost for Relocation of Business) (Pulau 1 of Forest City Special Financial Zone) Rules 2025 [P.U.(A) 360]
Effective : The Rules are deemed to have come into operation on 1 September 2024.
The Rules provide that in ascertaining the adjusted income of a qualifying person from its business for a YA, a deduction of up to RM500,000 is allowed for relocation costs incurred to relocate its business to Pulau 1 of Forest City SFZ, provided that such relocation takes place from 1 September 2024 to 31 December 2034.
The qualifying relocation costs are as follows:
Any cost incurred for planning, execution or supervision of the relocation of business
Packing or unpacking (materials or labor charges)
Transportation
Insurance premium for the purposes of relocation of business
Warehousing
Stamp duty exemption and remissions
Stamp Duty (Single Family Fund Company) (Pulau 1 of Forest City Special Financial Zone) (Exemption) Order 2025 [P.U.(A) 352]
Effective : 1 September 2024 to 31 December 2034
The Order provides a stamp duty exemption on any instrument that is chargeable with duty for transfer of a qualifying asset between a single family fund company and a member of a single family or a company or trust body which is wholly owned, directly or indirectly, by a member of the single family. The exemption is applicable to instruments which are executed between 1 September 2024 and 31 December 2034.
Stamp duty remission
Effective : 1 September 2024 to 31 December 2034
A stamp duty remission of 50% is given on instruments relating to the purchase of a residential unit or commercial unit in Pulau 1 of FCSFZ.
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Remission order |
Instrument |
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Stamp Duty (Instrument of Loan or Financing Agreement in relation to Individual) (Pulau 1 Forest City Special Financial Zone) (Remission) Order 2025 [P.U.(A) 353] |
Loan or financing agreement between an individual and licensed financial institution, prescribed development financial institution, registered co-operative society, Borneo Housing Mortgage Bhd and Mutiara Mortgage & Credit Sdn. Bhd. |
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Stamp Duty (Instrument of Transfer in relation to Individual) (Pulau 1 of Forest City Special Financial Zone) (Remission) Order 2025 [P.U.(A) 354] |
Instrument of transfer between a developer and individuals. |
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Stamp Duty (Instrument of Loan or Financing Agreement in relation to Qualifying Person) (Pulau 1 of Forest City Special Financial Zone) (Remission) Order 2025 [P.U.(A) 355] |
Loan or financing agreement between a qualifying person and licensed financial institution, prescribed development financial institution, registered co-operative society, Borneo Housing Mortgage Bhd and Mutiara Mortgage & Credit Sdn. Bhd. |
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Stamp Duty (Instrument of Transfer in relation to Qualifying Person) (Pulau 1 of Forest City Special Financial Zone) (Remission) Order 2025 [P.U.(A) 356] |
Instrument of transfer between a developer and a qualifying person. |
The stamp duty remissions above are subject to the following conditions:
- The sale and purchase agreement of the residential unit or commercial unit is executed from 1 September 2024 to 31 December 2034.
- The sale and purchase agreement shall not be in relation to a residential or commercial unit for which a prior agreement was executed before 1 September 2024 and subsequently cancelled.
- The construction of the residential unit or commercial unit was completed before 1 September 2024.
Real property gains tax exemption
Real Property Gains Tax (Pulau 1 of Forest City Special Financial Zone) (Exemption) Order 2025 [P.U.(A) 358]
Effective : The Order is deemed to have come into operation on 1 September 2024.
A stamp duty remission of 50% is given on instruments relating to the purchase of a residential unit or commercial unit in Pulau 1 of FCSFZ.
The Order provides that an individual who is not a citizen or not a permanent resident is exempted from real property gains tax on the chargeable gain derived from the disposal of the real property in Pulau 1 of FCSFZ. Conditions are:
The disposal of real property is made in the fourth year after the date of acquisition of the real property or any year thereafter.
The sale and purchase agreement for the disposal of the real property is executed from 1 September 2024 to 31 July 2034 and is duly stamped before 1 September 2034.
Where the disposal of real property is effected through a conditional contract requiring approval from the Federal Government or State Government, the approval must be obtained on or after 1 September 2024.