🇸🇬Section 13O and Section 13U: Tax Regimes for Singapore Funds

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.

🍓 From 1 January 2025, MAS Circular FDD Cir 10/2024 tightened the conditions. AUM is now counted only by designated investments; the minimum must be maintained at the end of each financial year; local business spending became tiered; economic presence through investment professionals became a standalone risk rather than a formal line item in the application.

Role of MAS and IRAS

MAS administers the award process and verifies compliance with regime conditions. IRAS remains the fiscal administrator: annual reporting, tax position, certificate of residence, and verification of exemption applicability go through the tax framework.

Key sources:

• Income Tax Act 1947, Sections 13O and 13U;
• Income Tax Regulations on exemption of income from funds managed by a Singapore fund manager;
• MAS Circular FDD Cir 10/2024 dated 1 October 2024, applicable from 1 January 2025;
• MAS — Fund Tax Schemes for Family Offices;
• IRAS fund management tax guidance.

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.

Eligibility

The fund must:

• be incorporated in Singapore and recognized as a Singapore tax resident;
• be managed by a Singapore fund manager with a CMS Licence or VCFM;
• not have 100% Singapore economic ownership;
• obtain an MAS award letter before the first exemption period.

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

Minimum — S$20 million in designated investments at the time of application. From 1 January 2025, this minimum must be maintained at the end of each financial year. Important detail: AUM is counted not by total portfolio value, but by the value of investments qualifying as designated investments.

Sources do not describe a grace period for "growing" AUM to the threshold. At application, you need not only a legally ready fund but also verifiable investment mass.

Local business spending

For 13O, tiered LBS applies:

LBS typically includes salaries of Singapore staff, office, audit, lawyers, corporate services, taxes, custody, MAS compliance, and local IT infrastructure for fund management. Not counted: offshore adviser fees, fund administration outside Singapore, and transactional broker fees.

Investment professionals

Minimum 2 investment professionals in Singapore required. Both must be Singapore tax residents, each with a fixed salary of at least S$3,500 per month; one must not be a family member of the UBO.

If only one is hired at application — a one-year grace period for hiring the second may be possible. This does not eliminate the economic presence requirement: MAS looks at genuine involvement in portfolio management, research, trading, and investment decision-making.

Capital deployment

From 1 January 2025, 13O requires deploying at least 10% of AUM or S$10 million (whichever is lower) in eligible local investments. Sources list SGX-listed equities, corporate bonds of Singapore issuers, units in Singapore PE/VC funds, and climate/ESG projects in Singapore.

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 with CMS Licence or VCFM;
• 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. For master-feeder, one award can cover the aggregate structure if conditions are met at the level agreed with 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. From 1 January 2025, the level must be maintained at the end of each financial year.

The threshold cannot be assessed by accounting AUM without asset classification. Direct Singapore real estate and stakes in related companies with operating business do not work as designated investments for regime purposes.

Local business spending

For 13U, LBS is also tiered:

Composition of expenses is similar to 13O. Offshore service providers and transactional broker fees do not satisfy LBS.

Investment professionals

Minimum 3 investment professionals in Singapore. At least one must not be a family member of the UBO. Minimum fixed salary — S$3,500 per month, but economically more important that functions are not nominal: investment committee minutes, due diligence files, and actual decisions must confirm economic presence.

What is exempt from tax

The exemption covers specified income from designated investments at the fund level. Sources list:

• capital gains from sale of shares, bonds, and fund units;
• dividends;
• interest on bonds and deposits;
• income from derivatives, FX, and commodity contracts;
• distributions from REITs and private fund units.

Not exempt: income from direct ownership of Singapore real estate, income from related companies with operating business, and trading income not qualifying as income from designated investments.

Distributions from 13O / 13U funds to non-resident beneficiaries typically proceed without Singapore withholding tax. 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.
2. Engage a Singapore fund manager with CMS Licence or VCFM.
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, and for 13O — capital deployment plan.
5. Submit Form 13O or 13U to MAS Financial Markets Development Division.
6. Several rounds of MAS questions.
7. Receive award letter with commitments on AUM, LBS, number of IPs, and capital deployment.

From July 2025, MAS indicates a target timeline of 3 months for reviewing a complete application. Practically, from first structuring call to live award takes 6–9 months for 13O and 6–12 months for 13U: entity setup, hiring, and banking take separate time.

Annual reporting and maintaining substance

After the award, the regime must be maintained annually. Minimum dossier:

• audited financial statements;
• IRAS filing and tax position on specified income;
• 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 13O;
• confirmation that structure has not exceeded award letter parameters.

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.
• Structure linked to GIP Option C, where SFO typically needs tax-efficient setup.

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 LBS S$500K+ 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 — structure with 100% Singapore economic ownership without offshore element.
• Economics do not support LBS, payroll, audit, compliance, and management overhead.
• Portfolio predominantly direct Singapore real estate or non-designated investments.

Q/A

How does 13O differ from 13U in practical terms

13O is for Singapore resident fund with AUM from S$20 million, typically Pte. Ltd. or standalone VCC. 13U is for larger and more flexible structures (master-feeder, umbrella VCC, offshore vehicles under SG manager) with AUM from S$50 million and 3 investment professionals. 13U permits structures that 13O does not cover.

What counts as designated investment

Listed equities and bonds, fund units, REITs, deposits, derivatives, FX and commodity contracts. Not included: direct Singapore real estate, stakes in related companies with operating business, trading income outside investment activity. Full list — in Income Tax Regulations.

Can AUM be raised to S$20 million after obtaining award

Under updated rules from 1 January 2025 — no. AUM in designated investments must be at application and maintained at end of each financial year. Sources do not provide a grace period.

What is included in local business spending

Singapore staff salaries, office, audit, lawyers, corporate services, taxes, custody, MAS compliance, local IT infrastructure. Not included: offshore advisers, fund administration outside Singapore, transactional broker fees.

Can Section 13D be used instead of 13O / 13U

13D is an automatic regime for offshore funds under Singapore manager, without MAS award. Without Singapore DTA protection and without Certificate of Residence. Suits GP with offshore LP base; does not suit if DTA protection or onshore reputation is needed.

How long does obtaining award take

From July 2025, MAS target timeline is 3 months for reviewing complete application. Practically from first structuring call to live award takes 6–9 months for 13O and 6–12 months for 13U, as entity setup, IP hiring, and bank onboarding take separate time.

What happens if economic presence drops after award

MAS requires maintaining AUM, LBS, IP, and (for 13O) capital deployment annually. Drop is recorded in audited statements and IRAS tax position. With repeated violations, award may be revoked and exemption withdrawn retrospectively with penalties.

Can 13O / 13U be combined with trust

Yes — this is a typical Family Office Trust construction. Trustee holds VCC shares, VCC under licensed manager operates under 13O or 13U. The trust itself is taxed separately, 13O / 13U regime applies to VCC, not to trust. See Trust in Singapore.

Related topics

• Section 13D — automatic regime for offshore funds
• VCFM: Venture Capital Fund Manager licence
• Variable Capital Company (VCC)
• Setting up a private fund in Singapore
• Wealth Planning in Singapore
• Trust in Singapore
• DBS Private Bank and DBS introduction
• Singapore GIP and investment residence

Sources

• MAS — Fund Tax Schemes for Family Offices
• MAS — Fund Tax Incentive Schemes for Family Offices (infographics)
• IRAS — Fund Management Tax Guides
• Income Tax Act 1947

FAQ

What counts as designated investment

Listed equities and bonds, fund units, REITs, deposits, derivatives, FX and commodity contracts. Not included: direct Singapore real estate, stakes in related companies with operating business, trading income outside investment activity. Full list — in Income Tax Regulations.

Can AUM be raised to S$20 million after obtaining award

Under updated rules from 1 January 2025 — no. AUM in designated investments must be at application and maintained at end of each financial year. Sources do not provide a grace period.

What is included in local business spending

Singapore staff salaries, office, audit, lawyers, corporate services, taxes, custody, MAS compliance, local IT infrastructure. Not included: offshore advisers, fund administration outside Singapore, transactional broker fees.

Can Section 13D be used instead of 13O / 13U

13D is an automatic regime for offshore funds under Singapore manager, without MAS award. Without Singapore DTA protection and without Certificate of Residence. Suits GP with offshore LP base; does not suit if DTA protection or onshore reputation is needed.

How long does obtaining award take

From July 2025, MAS target timeline is 3 months for reviewing complete application. Practically from first structuring call to live award takes 6–9 months for 13O and 6–12 months for 13U, as entity setup, IP hiring, and bank onboarding take separate time.

What happens if economic presence drops after award

MAS requires maintaining AUM, LBS, IP, and (for 13O) capital deployment annually. Drop is recorded in audited statements and IRAS tax position. With repeated violations, award may be revoked and exemption withdrawn retrospectively with penalties.

Can 13O / 13U be combined with trust

Yes — this is a typical Family Office Trust construction. Trustee holds VCC shares, VCC under licensed manager operates under 13O or 13U. The trust itself is taxed separately, 13O / 13U regime applies to VCC, not to trust. See Trust in Singapore.

Key factual claims

• 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.
• 13O is the Singapore Resident Fund Scheme for Singapore-based funds, most commonly Pte. Ltd.
• 13O is designed for funds incorporated in Singapore and qualifying as Singapore tax residents.
• Minimum — S$20 million in designated investments at the time of application.
• For 13O, tiered LBS applies:
• Minimum 2 investment professionals in Singapore required.
• From 1 January 2025, 13O requires deploying at least 10% of AUM or S$10 million (whichever is lower) in eligible local investments.
• 13U suits larger funds and complex structures.