Singapore’s family office sector has expanded so quickly that two slim provisions of the Income Tax Act 1947 — Sections 13O and 13U — now govern much of the wealth flowing into the city-state. These twin tax incentive schemes exempt qualifying fund vehicles from Singapore tax on most investment income, and they have become the structural backbone of nearly every single family office (SFO) and many multi-family offices established here.
Yet the schemes are not interchangeable. Section 13O and Section 13U serve different sizes of family wealth, demand different levels of operational substance, and impose different ongoing obligations. Choosing the wrong scheme — or failing to keep up with the tightened conditions that took effect from 1 January 2025 — can mean a denied application, a withdrawn incentive, or unexpected tax exposure.
This guide compares Sections 13O and 13U side by side as they stand for 2026, with reference to the latest Monetary Authority of Singapore (MAS) guidelines and the underlying provisions in the Income Tax Act 1947. If you are still weighing whether a family office is the right vehicle in the first place, read our Complete Guide to Setting Up a Family Office in Singapore (2026) first.
What Sections 13O and 13U Actually Do
Both schemes sit within the fund tax incentive framework administered by MAS in coordination with the Inland Revenue Authority of Singapore (IRAS). In essence, each scheme grants an income tax exemption on specified income derived from designated investments — broadly, capital gains, dividends, interest and similar returns from listed and unlisted securities, debt instruments, and most fund interests.
Without the incentive, a Singapore-incorporated fund vehicle would be subject to corporate income tax at the prevailing 17% rate. Our Singapore Corporate Tax 2026 guide walks through how that headline rate normally applies. With 13O or 13U status, qualifying investment returns flow through the structure substantively tax-free in Singapore, and there is generally no withholding tax on distributions to non-resident beneficial owners.
The trade-off is substance. Both schemes require the fund to be managed by a Singapore-based fund manager — almost always the family office company itself — and impose minimum thresholds for assets, professionals, and local spending. The thresholds are simply pitched at very different levels.
Section 13O at a Glance
Section 13O is the entry-point scheme. It is designed for smaller family offices and is the more common choice for first-generation single family offices establishing themselves in Singapore.
Eligible vehicle
The fund must be a Singapore-incorporated and tax-resident company. From 1 January 2025, MAS extended the scheme to limited partnership funds via the new Section 13OA, which applies the same conditions but at the LP level.
Minimum AUM
S$10 million in designated investments at the point of application, with a commitment to increase to S$20 million within two years. From the 2025 changes onward, funds must also maintain at least S$5 million AUM at the end of every financial year, measured against designated investments rather than total assets.
Investment professionals
At least two investment professionals (IPs) must be employed by the fund manager. This is a tightening — Section 13O previously had no minimum IP requirement. Each IP must earn at least S$3,500 per month and be substantively engaged in investment activities.
Local business spending
Tiered annual local business spending (LBS) starting at S$200,000 for funds under S$50 million AUM. Qualifying LBS includes salaries to Singapore-based staff, professional fees paid to Singapore service providers (audit, legal, corporate secretarial, tax, custody) and rental of Singapore office space.
Local investment requirement
From January 2025, both 13O and 13U funds must invest at least 10% of AUM or S$10 million (whichever is lower) into qualifying local investments — SGX-listed equities, qualifying debt securities, or non-listed Singapore operating companies and funds investing in them.
Section 13U at a Glance
Section 13U (formerly known as the Enhanced Tier Fund scheme) is the larger, more flexible cousin of 13O. It is the scheme of choice for established families with substantial liquid wealth, and the only realistic option once AUM crosses about S$50 million.
Eligible vehicle
13U is jurisdictionally agnostic on the fund vehicle. The fund can be a Singapore company, a limited partnership, a trust, a Variable Capital Company (VCC), or even a foreign-incorporated entity, provided it is managed from Singapore. This flexibility is one of the main reasons sophisticated families and external investor structures choose 13U. For a refresher on VCC mechanics, see our VCC vs Cayman SPC comparison.
Minimum AUM
S$50 million at the point of application, and now — following the 2025 reforms — S$50 million must be maintained at the end of every financial year. The previous concession (where AUM only had to be met at application) has been removed.
Investment professionals
At least three IPs are required, at least one of whom must be a non-family member. This non-family IP rule is a 2026 emphasis: MAS has signalled that it expects genuine independence at the investment decision-making level, not a token third hire.
Local business spending
Tiered LBS:
- Funds with AUM up to S$50 million: minimum S$200,000 per year
- Funds with AUM between S$50 million and S$100 million: minimum S$500,000 per year
- Funds with AUM above S$100 million: minimum S$1 million per year
Local investment requirement
The same 10%-of-AUM-or-S$10 million-whichever-is-lower local investment requirement applies, calibrated against the larger 13U asset base.
Side-by-Side Comparison
| Criterion | Section 13O | Section 13U |
|---|---|---|
| Fund vehicle | Singapore company (or LP via 13OA) | Any vehicle, Singapore or offshore |
| Minimum AUM at application | S$10 million (rising to S$20m within 2 years) | S$50 million |
| Ongoing AUM floor | S$5 million in designated investments | S$50 million |
| Minimum investment professionals | 2 IPs | 3 IPs (one non-family) |
| Annual LBS | From S$200,000 (tiered) | S$200,000 to S$1 million (tiered) |
| Local investment | 10% of AUM or S$10m, whichever lower | 10% of AUM or S$10m, whichever lower |
| Tax outcome | Exemption on specified income from designated investments | Exemption on specified income from designated investments |
| Approval regime | MAS application required | MAS application required |
| Scheme expiry | 31 December 2029 | 31 December 2029 |
Which Scheme Should Your Family Choose?
The decision usually comes down to four practical factors: investible wealth, intended structure, family size, and appetite for substance.
1. Investible wealth
If liquid investible assets are below about S$30–40 million, 13O is the only realistic option, and you should plan from day one for the S$20 million two-year escalation. Once AUM is comfortably above S$50 million and likely to grow, 13U becomes the better long-term choice — its higher LBS floor is offset by greater structural flexibility and investor credibility.
2. Intended structure
If the family wants to use a VCC umbrella with sub-funds (for example, separating private equity, hedge fund and real estate exposures), 13U is the natural fit. 13O is restricted to Singapore corporate or LP vehicles, so umbrella VCC structures fall outside its scope.
3. Family size and complexity
Multi-generational or multi-branch families with several decision-makers, external co-investors, or planned third-party allocations are typically pushed toward 13U because of the non-family IP requirement and broader vehicle options. Single-couple SFOs with simpler governance often stay in 13O.
4. Substance appetite
13U requires meaningfully more local hiring and spending. Families that genuinely want to anchor their economic life in Singapore — and may also be exploring the Global Investor Programme for residency or PR pathways — will find the 13U substance levels easier to absorb. Those treating Singapore as one node in a multi-jurisdiction setup may prefer the lighter 13O footprint.
The 2025–2026 Tightening: What Changed
It is worth flagging the recent shifts because they affect both new applicants and existing incentive holders.
From 1 January 2025, MAS narrowed the AUM measure to designated investments only, removing the ability to meet thresholds with cash, real estate, or other non-qualifying assets. Annual AUM floors now apply at every financial year-end, not just at application. The local investment carve-out was introduced, requiring genuine deployment into the Singapore economy rather than purely passive offshore exposures. Section 13O picked up a minimum two-IP requirement for the first time, and Section 13U’s three-IP rule was clarified to require at least one non-family member.
MAS has also intensified its scrutiny of source-of-wealth documentation and economic substance during the application process. Families should expect more searching questions about the origin of capital, the family’s real-world activities, and the rationale for choosing Singapore. The scheme expiry was extended to 31 December 2029, which gives runway, but it is a clear signal that future renewals will be conditional on continuing real substance.
Application Process and Timing
Applications for both schemes are submitted to MAS, typically through the family office company once it is incorporated and has appointed its key personnel. A complete submission usually includes the family tree and source-of-wealth narrative, the proposed investment policy statement, the structure chart, the IP profiles, and the projected LBS.
Realistic processing timelines for 2026 are 4 to 9 months from a complete filing, depending on complexity. Pre-application engagement with MAS — often via a written submission summarising the family, structure and policy — is strongly recommended for 13U cases and for any 13O case involving operational businesses, non-financial assets, or unusual jurisdictional flows.
Most families also need supporting infrastructure: a Singapore-resident director (a statutory requirement under the Companies Act), a registered office, a corporate secretary, and audited annual financial statements. If you do not yet have a resident director on the family team, our Singapore PR application guide covers the immigration pathways that can solve this longer-term, while a nominee director arrangement can bridge the gap in the interim.
Common Pitfalls
The most frequent reasons applications stumble or incentives are later withdrawn are familiar across both schemes. Underestimating LBS — particularly the upward step at S$50 million and S$100 million AUM thresholds — can quietly breach the conditions in a high-growth year. Treating the local investment requirement as optional, rather than a hard floor, is another recurring issue, particularly for families whose investment philosophy is heavily offshore.
On the people side, employing investment professionals who do not actually make investment decisions, or whose remuneration falls below the substantive threshold, is a red flag MAS now actively probes. And on the structural side, mixing personal assets, operating businesses, and the incentivised fund inside a single entity tends to invite disqualification of the non-fund income from the scheme — and can complicate IRAS audits years later.
Conclusion
Sections 13O and 13U remain the most attractive family office tax frameworks in Asia, but they are no longer light-touch. The 2025–2026 reforms have moved Singapore decisively toward substance-based incentives, and the families that thrive under the schemes are those who anchor real economic activity here — hiring real professionals, spending real money, and investing meaningfully in the local economy.
Choosing between 13O and 13U is rarely a close call once the numbers are on the table. Below S$30 million, 13O is the practical choice; above S$50 million with a multi-vehicle ambition, 13U almost always wins. The harder questions are about structure, governance, and how the family wants to live and operate in Singapore over the next decade.
If you are evaluating either scheme, or are an existing 13O fund considering whether to migrate up to 13U, Raffles Corporate Services can guide you through the full lifecycle — incorporation, MAS engagement, IRAS compliance, ongoing LBS tracking, and the corporate secretarial backbone that keeps the structure compliant year after year.
— The Editorial Team, Raffles Corporate Services