🇸🇬Section 13O and Section 13U: Singapore Fund Tax Exemption Schemes

Concept

Section 13O and Section 13U of the Income Tax Act 1947 are two Singapore tax regimes for funds that exempt specified income from designated investments from the standard 17% corporate tax. Unlike Section 13D, these are not automatic regimes: the fund must obtain an award letter from MAS before the exemption period begins.

13O is the Singapore Resident Fund Scheme for Singapore-based funds, most commonly Pte. Ltd. or VCC. 13U is the Enhanced-Tier Fund Scheme for larger and more flexible structures: onshore, offshore, master-feeder, trust, limited partnership, or umbrella VCC. Both regimes have been extended until 31 December 2029, and a fund awarded by then keeps the exemption for its life as long as it meets the conditions (MAS Circular FDD Cir 05/2026).

Two tracks run in parallel. General (non-SFO) funds under a licensed manager follow MAS Circular FDD Cir 10/2024 as amended by FDD Cir 05/2026 of 31 July 2026: from 1 January 2025 AUM is counted only by designated investments, with an entry minimum of S$5 million for 13O and S$50 million for 13U (MAS removed the annual test of that threshold retroactively from 1 January 2025), tiered local business spending, and a new 13OA regime for Singapore limited partnerships.

Family offices (SFO) follow the dedicated MAS framework tightened on 5 July 2023: for 13O — S$20 million in designated investments required at the time of application (the April 2022 terms — S$10 million at entry with a build-up to S$20 million within two years — were superseded on 5 July 2023), a mandatory share of local investments, tiered business spending, and investment professionals including a non-family member. The family-office route in full — team, immigration, the office's own tax and philanthropy — is set out in Section 13O for a Singapore single family office; this page compares the schemes across both tracks. The key parameters of both regimes in the family-office track, side by side:

The thresholds count designated investments, not accounting AUM.

Role of MAS and IRAS

MAS runs the schemes: it grants the award, sets the conditions through its circulars and the letter of award, and checks compliance through the fund's Annual Declaration, with the right to ask for supporting documents or audit certification and to terminate an award if they are not provided (FDD Cir 05/2026, Annexes 12 and 13). The conditions for family-office funds are summarised on the MAS scheme page.

IRAS administers the tax itself: the fund files its income tax return, the manager of a 13O or 13OA fund declares any non-qualifying investors to the Comptroller of Income Tax, and those investors pay the 30/50-rule penalty through their own returns. A Certificate of Residence for a 13O company depends on its control and management — the board meetings where strategic decisions are made — being exercised in Singapore (IRAS). The legal basis is the Income Tax Act 1947, Sections 13O, 13OA and 13U, and the income tax regulations made under them.

Section 13O: Singapore Resident Fund Scheme

13O is designed for funds incorporated in Singapore and qualifying as Singapore tax residents. In practice, this is often a Singapore Pte. Ltd. or standalone VCC. Since 1 January 2025 Section 13OA extends the same scheme to limited partnerships registered in Singapore: the partnership meets the conditions as one entity, without looking through to the partners, and its general partner files the annual declaration.

Eligibility

The fund must:

• be a company incorporated in Singapore whose control and management is exercised in Singapore (for 13OA — a limited partnership registered under the Limited Partnerships Act 2008);
• use a Singapore-based fund administrator;
• be managed by a Singapore fund manager holding a CMS Licence (including VCFM) or exempt from licensing, as a single family office is;
• obtain an MAS award letter before the first exemption period.

Resident corporate investors fall under the 30/50 rule: a Singapore-resident non-individual investor that, with its associates, holds more than 30% of a fund with fewer than ten investors (50% with ten or more) pays a financial penalty unless it is a qualifying investor, such as another 13O or 13U fund; individuals are always qualifying investors (FDD Cir 05/2026, Annex 6).

This is a regime for structures with genuine Singapore tax and management base. If the fund remains offshore and only management is transferred to Singapore, Section 13D is typically examined rather than 13O.

AUM

For a family office, the minimum is S$20 million in designated investments at the time of application and at the end of each basis period; the fund's investments in the family's own operating businesses do not count towards that minimum. (The April 2022 rules — S$10 million at entry with a commitment to build up to S$20 million within two years — were superseded on 5 July 2023.) AUM is measured by the value of assets qualifying as designated investments; total accounting NAV is not used for the threshold.

Since 5 July 2023 there is no grace period: the full S$20 million must be verifiable at application (the former S$10 million entry with a two-year window was the April 2022 regime). At application you need both a legally ready fund and verifiable investment mass. For general non-SFO funds the S$5 million minimum for 13O and 13OA is an entry condition that may be met by the end of the third year of assessment of the award; MAS removed the annual test of it retroactively from 1 January 2025 (FDD Cir 05/2026).

Local business spending

For 13O managed by a family office (an exempt SFO acting as fund manager), the spending requirement is tiered against the fund's AUM in designated investments. The grid of the MAS framework of 5 July 2023 governed basis periods that ended before 1 August 2026:

From the year of assessment whose basis period ends on or after 1 August 2026, the grid rebuilt by FDD Cir 05/2026 applies to new SFO awards and also to existing awards granted under the 18 April 2022 and 5 July 2023 conditions. General non-SFO funds under a licensed manager run on their own grid (FDD Cir 10/2024), which binds fully from YA 2028; until then a 13O or 13OA non-SFO fund needs total business spending of S$200,000. In both, the breakpoints count AUM in designated investments:

In the two upper SFO tiers only part of the amount may come from eligible donations to Singapore charities and grants to blended-finance instruments, with grants counted double: at least S$300,000 and S$500,000 respectively must be local business spending proper (MAS). What separates the two tracks is not the size of the fund but who manages it.

MAS counts as LBS the operating expenses paid to contracting parties in Singapore — remuneration, fund management fees and other operating costs: in practice Singapore staff, office, audit, lawyers, corporate services, custody, compliance and local IT for fund management. Fees paid to advisers or administrators outside Singapore do not count.

Investment professionals

Minimum 2 investment professionals in Singapore: portfolio managers, research analysts or traders who are Singapore tax residents, earn more than S$3,500 a month and spend more than half their time on that work — "more than", so exactly S$3,500 does not clear the floor. For an SFO fund at least one of them must not be a family member of the fund's beneficial owners; for a non-SFO 13O or 13OA fund, the manager's two IPs are required from YA 2028.

A new SFO award approved from 1 August 2026 may be applied for with one IP, family member or not; the second, with at least one non-family member between them, must be employed by the end of the basis period of the first year of assessment, or the award is revoked from its start. MAS can reject a reported IP who lacks relevant experience or qualifications and looks at genuine involvement in portfolio management, research, trading, and investment decision-making.

Capital deployment

A family-office fund must also invest the lower of 10% of its AUM in designated investments or S$10 million in qualifying assets, first by the end of the basis period of the first full year of assessment after the award starts. From basis periods ending on or after 1 August 2026 — for new awards and for existing awards under the 18 April 2022 and 5 July 2023 conditions — three options qualify: investments listed on MAS-approved exchanges; investments distributed by MAS-licensed financial institutions in Singapore, other than equities listed on non-approved exchanges; and non-listed Singapore companies with an operating business and substantive presence in Singapore. Equities on approved exchanges, funds investing substantially in Singapore-listed equities, blended-finance instruments and non-listed Singapore operating companies count at twice their value (MAS).

This is a separate test: it cannot be substituted by LBS, AUM, or hiring staff.

Section 13U: Enhanced-Tier Fund Scheme

13U suits larger funds and complex structures. Can apply to company, trust, limited partnership, VCC, master-feeder, onshore or offshore fund. Umbrella VCC with sub-funds is a typical 13U configuration for multi-strategy family offices.

Eligibility

The fund must:

• be managed by a Singapore fund manager holding a CMS Licence (including VCFM) or exempt from licensing;
• use a Singapore-based fund administrator where the fund is a Singapore-incorporated company;
• obtain an MAS award letter;
• meet conditions on AUM, LBS, investment professionals, and annual reporting;
• maintain the structure described in the award letter.

13U permits single family office and multi-family office. Since 1 January 2025 a master-feeder, master-feeder-SPV or master fund-SPV structure meets the AUM and spending conditions once, as a single fund, however many feeders or SPVs it holds; adding an SPV still requires an application to MAS. For umbrella VCC, each sub-fund is ring-fenced separately, but the award can cover the umbrella.

AUM

Minimum — S$50 million in designated investments at the time of application. For SFO funds the level must also be met at the end of each basis period; for general non-SFO funds the S$50 million is an entry condition only, since MAS removed the annual test retroactively from 1 January 2025 (FDD Cir 05/2026).

The threshold cannot be assessed by accounting AUM without asset classification. Singapore immovable property and shares or loans of unlisted companies trading or holding it do not count as designated investments.

Local business spending

For 13U the grids are the same as for 13O (above): the family-office grid with breakpoints of S$250 million and S$2 billion from basis periods ending on or after 1 August 2026, and the non-SFO grid of S$200,000, S$300,000 and S$500,000 (13U funds awarded before 2025 move onto it from YA 2028 and meet a flat S$200,000 until then). Offshore service providers do not satisfy LBS.

Investment professionals

Minimum 3 investment professionals in Singapore. At least one must not be a family member of the UBO. Under FDD Cir 05/2026 a new SFO fund may apply with two (of any status), but must hire the third and a non-family member by the end of the basis period of the first year of assessment of the award. The salary floor is the same as for 13O — more than S$3,500 per month each — but economically more important that functions are not nominal: investment committee minutes, investment files, and actual decisions must confirm economic presence.

Earlier SFO awards

FDD Cir 05/2026 also moved family-office funds awarded before 1 August 2026 onto revised annual conditions, which apply from the year of assessment whose basis period ends on or after that date:

For awards applied for before 18 April 2022 the S$200,000 is total business spending under 13O and local business spending under 13U (FDD Cir 05/2026, Annexes 6B and 7B).

What is exempt from tax

The exemption covers specified income from designated investments at the fund level; MAS publishes both lists in Annex 3 of FDD Cir 05/2026. Designated investments include:

• shares and debt securities, except those of unlisted companies trading or holding Singapore property (property developers are not excluded);
• units in unit trusts, REITs and ETFs, and interests in LLCs and partnerships that do not carry on business in Singapore (a non-listed partnership must also invest only in designated investments);
• deposits, foreign exchange, futures, and financial, commodity and emission derivatives;
• loans, other than loans to finance Singapore property;
• structured and Islamic financial products, immovable property outside Singapore and, from 1 August 2026, physical investment precious metals without the former 5% cap.

Income from these investments is specified income, with exceptions: distributions from an SGX-listed REIT, distributions from a Singapore-resident trust that is not itself exempt under 13D, 13F, 13L or 13U, and Singapore-source partnership or LLC income already taxed in Singapore. The full list with its conditions is on the designated investments and specified income page.

An SFO fund may hold the family's own operating businesses: they count towards AUM for the other conditions if they qualify as designated investments, but not towards the S$20 million or S$50 million minimum. A non-SFO fund may not hold them at all.

Certificate of Residence is available for 13O and the onshore variant of 13U, making DTA protection one of the practical differences from offshore 13D.

Application process

1. Register the fund with ACRA for onshore structure — Pte. Ltd. or VCC (for 13OA, a limited partnership).
2. Engage a Singapore fund manager with CMS Licence or VCFM, or set up an SFO relying on the licensing exemption.
3. Prepare business plan, investment mandate, KYC on LP base, CVs and Employment Pass plan for investment professionals.
4. Investment policy, valuation methodology, audit framework, three-year LBS forecast; for an SFO fund — capital deployment plan and a private banking account with a MAS-licensed institution, which must exist at application.
5. File with the MAS Financial Centre Development Department; for an SFO fund the first filing may be a preliminary submission or an eligibility form, and its date fixes which set of SFO conditions applies.
6. Several rounds of MAS questions.
7. Receive award letter with commitments on AUM, LBS, number of IPs, and capital deployment.

MAS has sharply cut its review time: in its written reply to Parliament of 24 September 2025 it stated that most family office tax scheme applications are now processed within three months, down from the previous 12. This is reported performance, not a published service standard: MAS guarantees no turnaround, and an incomplete filing or extra rounds of questions stretch it.

Annual reporting and maintaining substance

After the award, the regime must be maintained annually. Every 13O, 13OA and 13U fund files an Annual Declaration to MAS within four months after the end of each basis period; a fund that misses it, or cannot be reached, loses the exemption for that year of assessment and risks termination of the award (FDD Cir 05/2026, Annex 12). The filing calendar together with the IRAS returns is on the annual filings page. Minimum dossier behind the declaration:

• audited financial statements;
• IRAS filing and tax position on specified income; for 13O and 13OA, the manager's declaration of non-qualifying investors;
• classification of AUM in designated investments at end of financial year;
• LBS schedule with supporting invoices, payroll, and provider contracts;
• evidence on investment professionals: employment contracts, residence, salary, role description, investment committee minutes;
• capital deployment tracking for family-office funds;
• confirmation that structure has not exceeded award letter parameters.

The declaration also matters outside the scheme: a 13O, 13OA or 13U fund that files it and meets the conditions is treated as having adequate economic substance, so its foreign-sourced disposal gains fall outside Section 10L of the Income Tax Act (FDD Cir 05/2026, Annex 12).

Economic presence and reporting should not be conflated. AUM answers "are there enough qualifying assets," LBS — "did the fund spend enough in Singapore," IP — "is there a real investment team," IRAS filing — "what income is exempt and why."

VCC as vehicle

VCC is a natural vehicle for 13O / 13U. Standalone VCC can go under 13O; umbrella VCC with multiple sub-funds is more commonly used under 13U.

VCC advantages in this context: statutory ring-fencing of assets and liabilities between sub-funds, flexible capital operations, share buybacks, and distributions from capital. For multi-strategy family offices, this allows holding PE, hedge, real estate, and liquid portfolios in separate compartments without creating multiple independent funds.

Who it suits

Section 13O — for whom

• Single Family Office with AUM S$20–50 million.
• Family ready for Singapore fund instrument and genuine economic presence.
• Need for DTA protection and Certificate of Residence.
• Willingness for capital deployment in Singapore.

Section 13U — for whom

• Multi-family office or fund with AUM S$50 million+.
• Master-feeder, umbrella VCC, or multi-strategy architecture.
• Complex portfolio with multiple sub-funds and ring-fencing.
• Offshore or onshore fund under Singapore fund manager.
• Economics support the tiered local spending (from S$200,000 a year) and hiring 3 investment professionals.

When 13O / 13U do not suit

• No genuine economic presence in Singapore: office, IP residents, licensed fund manager, investment decision records.
• AUM below S$20 million (for 13O) or S$50 million (for 13U).
• For 13O — an investor base dominated by Singapore-resident companies that are not qualifying investors: the 30/50 penalty absorbs their share of the benefit.
• Economics do not support LBS, payroll, audit, compliance, and management overhead.
• Portfolio predominantly direct Singapore real estate or non-designated investments.

History and evolution of the regime

Renumbering and the first tightening

The regimes grew out of the former Section 13R and Section 13X. In the Income Tax Act 1947 (2020 Revised Edition, in force from 31 December 2021) the numbering was updated: 13R became 13O, and 13X became 13U. The economic logic stayed the same — exemption of specified income from designated investments in exchange for a Singapore management centre.

Singapore became a family-office hub at the turn of the 2010s–2020s, and in April 2022 MAS materially raised the bar for the SFO variants of 13O and 13U: AUM thresholds, a mandatory share of local investments, tiered business spending, and investment professionals of whom at least one must be a non-family member.

A further tightening followed on 5 July 2023: the 13O entry minimum became S$20 million in designated investments at the time of application, and the April 2022 grace period (S$10 million entry plus a two-year build-up) was abolished. From that point economic substance is tested substantively: by real people, spending, and investment decisions in Singapore.

The MAS circulars of 2024 and 2026

The next turn was FDD Cir 10/2024 of 1 October 2024. For general (non-SFO) funds, from 1 January 2025 AUM is counted only by designated investments: a minimum of S$5 million for 13O and S$50 million for 13U at the end of each financial year. Local business spending became tiered on its own grid — S$200,000 where AUM in designated investments is under S$250 million, S$300,000 from S$250 million to S$2 billion, and S$500,000 from S$2 billion — so both the amounts and the breakpoints differ from the SFO track, a separate 13OA regime appeared for Singapore limited partnerships, and closed-end funds gained the option to meet conditions on a cumulative basis.

The requirement that a 13O fund be a newly incorporated company was also removed. The 13D, 13O and 13U schemes are extended to 31 December 2029.

The next revision is FDD Cir 05/2026 of 31 July 2026. For non-SFO funds the annual test of the minimum AUM in designated investments is removed retroactively from 1 January 2025: the threshold stays as an entry condition, and 13O and 13OA funds may reach the S$5 million by the end of the third year of assessment of the award.

For SFO funds the local spending grid is rebuilt (breakpoints of S$250 million and S$2 billion instead of S$50 million and S$100 million) for new awards approved from 1 August 2026 and, from basis periods ending on or after that date, for existing awards under the 2022 and 2023 conditions; SFOs are given more time to hire their investment professionals, and the capital deployment requirement is simplified to three asset options; the 5% cap on physical investment precious metals is dropped from the designated investments list.

Licensing: the class exemption for single family offices

The licensing regime became structure-agnostic in 2026. The SFO licensing exemption is separate from the 13O and 13U tax awards: it does not remove the AUM, local-spending or investment-professional conditions, or the need for a MAS award. The class exemption, commencement notice and deadlines for new and existing offices are explained in Section 13O for a Singapore single family office.

Singapore and Hong Kong

At the regional level Singapore competes with Hong Kong. Hong Kong's FIHV grants 0% profits tax with a minimum of HK$240 million of specified assets managed by an SFO, at least two full-time qualified employees in Hong Kong and annual operating expenditure from HK$2 million. Singapore adds a condition of its own for family-office funds: at least one investment professional must be outside the family.

The general vector is substance-first: the incentive rests on real people, spending, and investment decisions in Singapore. In parallel, tax transparency is tightening: the fund and its UBOs fall within CRS automatic exchange, so substance and reporting should be planned together.