Section 13D offshore fund scheme — Step-by-step walkthrough

The section 13d offshore fund scheme is Singapore’s tax exemption for income earned by a non-resident fund that is managed by a Singapore-based fund manager. In practice it lets a high-net-worth family route its global portfolio through an offshore vehicle while keeping the investment team onshore, with “specified income” from “designated investments” exempt from Singapore tax for the life of the fund.

Raffles Corporate Services works with a panel of corporate and employment law firms; this article is general information, not legal advice.

What the section 13D offshore fund scheme actually is

Section 13D of the Income Tax Act 1947 (the provision formerly numbered 13CA) exempts the “specified income” of a prescribed person from “designated investments”, provided the fund is not a Singapore tax resident and is not 100% beneficially owned by Singapore investors. The fund vehicle sits offshore – typically a Cayman exempted company, a BVI company or a foreign limited partnership – while the day-to-day portfolio management is carried out by a fund manager based in Singapore. Section 13D of the Income Tax Act 1947 establishes the exemption so that the family’s underlying investment returns are not taxed in Singapore merely because the manager operates here.

Unlike the onshore schemes, the section 13D offshore fund scheme does not require an application to, or approval from, the Monetary Authority of Singapore (MAS) for the exemption itself. The exemption is self-assessed by the fund in its tax filing, which makes it the lightest-touch of the three family-office incentives. The trade-off is that the fund must remain genuinely offshore and must respect the non-resident and non-qualifying-investor conditions every year.

Who the scheme is for

The section 13D offshore fund scheme suits a family that already holds assets through an offshore holding structure and wants to bring its investment decision-making to Singapore without redomiciling the fund. It is also common for families in the early stage of building a Singapore presence, before assets under management justify the higher commitments of the onshore Section 13O or Section 13U routes. For a fuller comparison of all three, see our companion Section 13D offshore fund scheme — Complete 2026 guide.

Eligibility and the core conditions

To rely on the exemption, the fund (the “prescribed person”) and its manager must satisfy several requirements that are tested continuously rather than once:

• The fund must not be tax resident in Singapore and its control and management must sit outside Singapore.
• The fund must not be wholly beneficially owned, directly or indirectly, by Singapore persons – a qualifying-investor test that family offices monitor closely where Singapore-resident family members are beneficiaries.
• The income must be “specified income” derived from “designated investments” – a broad list that covers most listed and unlisted securities, bonds, derivatives, and many private-market interests, but which deliberately excludes Singapore immovable property and certain Singapore-issued instruments.
• The portfolio must be managed by a fund manager holding the appropriate Capital Markets Services (CMS) licence, or operating under a recognised exemption, in Singapore.

The fund manager dimension is where the VCC and licensing rules intersect. If the family later moves to a Variable Capital Company or a more formal fund structure, the manager’s status is governed by rules such as those discussed in our analysis of the VCC Act 2018 Section 46 permissible fund manager rules.

Cost and timeline (numerical specifics)

Because there is no MAS application for the exemption, the section 13D route is the fastest to stand up. Indicative 2026 figures for a single-family structure:

• Offshore fund vehicle incorporation and first-year administration: from S$8,000 to S$25,000 depending on jurisdiction.
• Singapore management company incorporation: from S$1,500, plus a corporate secretary retainer from S$800 per year.
• Annual Singapore tax compliance and exemption support: from S$3,500 per year.
• Minimum local substance commonly budgeted: at least two to three investment professionals, with a typical family-office operating budget from S$200,000 per year once the team is in place.
• Indicative timeline: 4 to 8 weeks to incorporate both vehicles and onboard with a private bank; the exemption then applies from the fund’s first year of assessment.

Step-by-step process

1. Map the family’s assets and residency. Confirm which family members are Singapore-resident and model the qualifying-investor test, since this drives whether 13D remains available year on year.
2. Establish the offshore fund vehicle. Incorporate the Cayman, BVI or foreign-LP vehicle and ensure its board and decision-making remain genuinely offshore.
3. Incorporate the Singapore management company. This is the entity that will employ the investment professionals and contract to manage the fund.
4. Secure the manager’s licensing position. Confirm whether the manager needs a CMS licence or can rely on a related-corporation exemption for a single family.
5. Document the management agreement. Put a written investment management agreement in place between the offshore fund and the Singapore manager.
6. Open banking and custody. Onboard the fund with a private bank or custodian, which is often the longest single step.
7. Self-assess the exemption. Claim section 13D in the fund’s annual return and retain supporting records on residency, ownership and designated investments.

Common mistakes and gotchas

The most frequent error is allowing the qualifying-investor test to drift – for example, when a Singapore-resident family member’s beneficial interest rises over time and quietly breaches the non-Singapore-ownership condition. A second pitfall is treating the offshore vehicle as offshore on paper while running every board decision from Singapore, which can compromise the non-resident requirement. A third is assuming all assets qualify; Singapore residential property and certain locally issued instruments fall outside “designated investments”. Families building Singapore residency for individual members should also coordinate immigration planning early – our colleagues at the employment agency set out the routes in The Complete Singapore PR Application Guide 2026.

How section 13D compares to 13O and 13U

Section 13D is offshore and self-assessed; Section 13O (Singapore Resident Fund) and Section 13U (Enhanced Tier Fund) are onshore and require MAS approval, but in return relax the qualifying-investor restriction and allow Singapore-resident ownership. Many families begin on 13D and migrate onshore as assets and local substance grow. Authoritative guidance on the family-office incentives is published by the Monetary Authority of Singapore, and filing positions should be checked against the Inland Revenue Authority of Singapore.

FAQs

Does the section 13D offshore fund scheme need MAS approval? No. Unlike 13O and 13U, the 13D exemption is self-assessed in the fund’s tax return, with no MAS application for the incentive itself.

Can Singapore residents invest in a 13D fund? The fund cannot be wholly beneficially owned by Singapore persons, and the qualifying-investor conditions limit Singapore-resident participation. Families monitor this annually.

What is the minimum fund size for 13D? There is no statutory minimum assets-under-management figure, which distinguishes 13D from 13U’s enhanced-tier thresholds.

Is Singapore property a designated investment? Generally no. Singapore immovable property and certain Singapore-issued instruments are excluded, so income from them is not exempt.

How long does setup take? Typically 4 to 8 weeks once documents and source-of-wealth information are ready, with banking onboarding the main variable.

Related guides

For the onshore alternatives and the GIP route for principals, read our wider family-office library and the EDB Global Investor Programme overview.

Need help with this? Call, SMS or WhatsApp +65 8501 7133, or email [email protected]. Raffles Corporate Services works with a panel of corporate and employment law firms; this article is general information, not legal advice.