MAS provides an update to fund tax incentive schemes for family offices
What are MAS fund tax incentive schemes?
Singapore’s fund tax incentive schemes, primarily Section 13O and Section 13U, provide tax exemptions on specified income derived from designated investments, subject to meeting regulatory conditions. These schemes are widely used by single family offices and institutional fund structures to:
- Achieve tax efficiency on investment income
- Centralize wealth management in Singapore
- Align with MAS regulatory and governance standards
Fund tax incentive scheme changes from MAS’ circular
We have set out below the key changes that were announced via MAS’ circular:
Extension of fund tax incentive schemes to 2029
The expiry date of 13D, 13O and 13U schemes has been extended to 31 December 2029. This extension provides long term certainty for family offices and fund managers and reinforces Singapore’s commitment to the asset and wealth management sector. In addition, the Goods and Services Tax remission scheme and withholding tax exemption continue to apply.
Minimum assets under management (“AUM”) for 13O and 13U
13O and 13U funds must meet a minimum AUM requirement at the end of each financial year:
- 13O – S$5million in designed investments (DI)
- 13U – S$50million in DI.
MAS now requires that AUM be calculated based on investment value rather than total net asset value. This change ensures that eligibility is determined by actively deployed capital rather than passive or non-qualifying assets. It also aligns the tax incentive framework more closely with real investment activity in Singapore.
Minimum local business spending (LBS) for both 13O and 13U schemes
There is a new tiered minimum LBS criteria for both schemes, subject to transitional arrangements:
| AUM (S$) | Minimum spending (S$) |
|---|---|
| AUM < 250m | 200,000 |
| 250m ≤ AUM < 2b | 300,000 |
| AUM ≥ 2b | 500,000 |
The updated framework increases required spending as AUM grows. This approach ensures that larger funds contribute proportionally more to the Singapore economy. It also encourages family offices to increase local hiring, engage Singapore based service providers, and deepen their participation in the broader financial ecosystem.
Close-ended fund treatment for funds
Close-ended funds may make an irrevocable one-time election to waive minimum AUM and tiered LBS requirements after a specified period.
Changes to investment objective/strategy for both 13O and 13U funds
Recent updates expand eligibility to include additional fund structures such as limited partnerships, while continuing to provide access to withholding tax exemptions and GST remission schemes. MAS has also introduced flexibility for certain fund types under defined conditions, which allows some structures to adapt their compliance approach over time where appropriate.
Key considerations for family offices
The MAS updates reflect a broader global shift toward substance driven regulation. New family offices must ensure that their structures meet minimum designated investment thresholds and are designed to support ongoing compliance with local business spending requirements. They should also align their investment strategies with MAS qualifying criteria from the outset to avoid future restructuring.
Existing family offices should assess how the changes impact their current structures and confirm that they remain compliant with revised AUM calculations and spending thresholds. In some cases, restructuring or operational adjustments may be required to maintain eligibility.
If you have questions about these changes to the fund tax incentive schemes, please reach out to our APAC Solutions team or contact us.