Section 13O tax incentive scheme — full lifecycle — Eligibility and requirements checklist

The Section 13O tax incentive scheme exempts qualifying income of a Singapore-based fund vehicle managed by a family office from Singapore tax, provided conditions on assets, professionals and local spending are met. It is administered by the Monetary Authority of Singapore under the Income Tax Act 1947 and is the most common entry point for a single family office in Singapore.

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

What the Section 13O tax incentive scheme covers

Section 13O of the Income Tax Act 1947 provides a tax exemption on specified income, such as dividends, interest and gains, derived by an approved fund vehicle that is incorporated and tax-resident in Singapore and managed by a Singapore family office. The fund must be a company, and the scheme was formerly known as the 13R scheme.

The exemption is not automatic. It applies only from the date of MAS approval and only for as long as the fund continues to meet the annual conditions. Income earned before approval, and income that falls outside the definition of specified income, remains taxable in the ordinary way.

Eligibility and requirements checklist

• A Singapore-incorporated and tax-resident fund company.
• Minimum fund size of S$20,000,000 in designated investments at the point of application, maintained thereafter.
• At least two investment professionals employed by the management company, with at least one who is not a family member.
• Tiered minimum annual local business spending from S$200,000 upwards, rising with fund size.
• A local investment requirement of 10% of AUM or S$10,000,000, whichever is lower.
• Audited financial statements and an annual compliance declaration to MAS.

The full lifecycle: application to annual renewal

The lifecycle runs from incorporation, through the MAS application, into a repeating annual compliance cycle. After approval, the fund files audited financial statements, submits an annual declaration to MAS confirming it still meets the conditions, and files its corporate tax return with IRAS claiming the exemption on qualifying income.

There is no periodic re-application, but the conditions are tested every year. Missing a condition in any given year, for example falling below the local-spend floor or letting headcount lapse, can cause the exemption to be lost for that year even if it resumes later. Good families treat the conditions as a live budget rather than a one-off hurdle.

Tax treatment in numbers

Singapore’s headline corporate tax rate is 17%. For a fund earning, say, S$3,000,000 of qualifying investment income, the Section 13O exemption removes what would otherwise be a material annual tax charge, which is the economic reason families invest in the substance the scheme requires. The savings must always be weighed against the annual running cost of the office, typically S$40,000 to S$120,000 plus salaries.

Cost and timeline

Application drafting and setup typically cost S$8,000 to S$18,000. Annual audit, tax and secretarial costs run S$40,000 to S$120,000 depending on complexity and the number of investments held. The MAS review generally takes three to six months, so the exemption commonly begins in the financial year after incorporation and funding.

Section 13O versus Section 13U

Section 13O suits families with S$20,000,000 to roughly S$50,000,000 in assets and lighter headcount needs. Families expecting to scale beyond S$50,000,000, to use a variable capital company or limited partnership, or to admit non-family co-investors, often prefer the Section 13U enhanced-tier scheme, which carries higher AUM and headcount thresholds in exchange for greater flexibility.

Common mistakes to avoid

Applicants frequently apply before the fund is actually funded to S$20,000,000, mis-classify family expenses as business spending, or under-document the investment professionals’ qualifications and roles. A further error is neglecting the local investment requirement, which reviewers increasingly treat as a substantive condition rather than a formality. Clean funding, clean books and clear employment contracts are the three things reviewers scrutinise most.

Documents and evidence reviewers expect

A strong Section 13O submission includes the fund constitution, proof that the S$20,000,000 has been deployed into designated investments, employment contracts and CVs for the investment professionals, a local business spending budget, and source-of-wealth documentation for the family. Gaps in any of these are the leading cause of clarification requests that extend the review beyond six months.

Ongoing compliance after approval

The exemption is maintained, not renewed. Each year the fund files audited accounts, submits its annual declaration to MAS, and claims the exemption in its IRAS corporate tax return. Failing the local-spend floor or letting professional headcount lapse in a given year can forfeit the exemption for that year, so families treat the conditions as a live annual budget rather than a one-time hurdle.

Related guides

• VCC 13O tax incentive — application and conditions — Costs and fees breakdown
• Family office hiring under 13O / 13U / GIP — Costs and fees breakdown
• Section 13O vs 13U 2026: Comparing Singapore Family Office Tax Incentives

Official sources and further reading

• MAS — Fund tax incentive schemes for family offices
• IRAS — Inland Revenue Authority of Singapore
• EDB — Global Investor Programme

FAQs

Is Section 13O income fully tax-exempt?
Qualifying specified income of the approved fund is exempt from Singapore tax; non-qualifying income and income earned before approval are not covered.

What is the minimum fund size for Section 13O?
S$20,000,000 in designated investments at the point of application, maintained thereafter.

How many investment professionals are required?
At least two, with at least one who is not a member of the family.

Does the exemption need annual renewal?
There is no re-application, but the fund must meet the conditions and declare compliance to MAS every year to keep the exemption.

What was Section 13O called before?
It was previously known as the Section 13R scheme before the Income Tax Act was renumbered.

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.