Section 13U enhanced-tier fund scheme – Frequently asked questions
The Section 13U enhanced-tier fund scheme is Singapore’s tax exemption for larger fund vehicles under the Income Tax Act 1947, aimed at family offices and funds with at least S$50 million in assets under management that employ a larger team of investment professionals than the Section 13O onshore scheme requires.
Raffles Corporate Services works with a panel of corporate and employment law firms; this article is general information, not legal advice.
What is the Section 13U enhanced-tier fund scheme?
Section 13U of the Income Tax Act 1947 (formerly Section 13X) exempts specified income of an approved fund from Singapore tax, provided the fund is managed by a Singapore-based licensed or registered fund manager and satisfies asset, staffing and local spending conditions set by MAS. It is the enhanced-tier equivalent of Section 13O, generally reserved for larger family offices and institutional-style fund vehicles.
Who is Section 13U for?
Section 13U suits family offices and funds managing at least S$50 million in assets, a threshold raised from S$20 million in April 2024. It is typically the scheme families move to once their SFO under Section 13O grows past the point where the smaller scheme’s staffing and reporting model is cost-effective, or where the family wants access to a wider range of prescribed investment categories available only under the enhanced tier.
Eligibility and requirements
The fund must hold at least S$50 million in assets under management and employ at least three investment professionals, at least one of whom is not a family member, all Singapore tax-resident and remunerated above the MAS-prescribed salary threshold. The fund must incur a minimum level of local business spending each year and meet prescribed minimum-investment requirements across categories including Singapore-listed equities, qualifying bonds and climate-related investments. As with Section 13O, MAS has extended the scheme to 31 December 2029, with qualifying conditions being tightened over the transition period.
Cost and timeline
MAS review typically takes 8 to 12 weeks from a complete application. Setup and ongoing costs are higher than under Section 13O, reflecting the larger required team: budget for three investment professional salaries each clearing the MAS threshold, fund administration and accounting (commonly from S$25,000 per year at this scale), and periodic external audit. Many families budget an additional 4 to 8 weeks beyond the MAS review period to recruit and onboard the third investment professional before submission.
Step-by-step process
1. Confirm assets under management meet or exceed S$50 million. 2. Recruit at least three investment professionals, including at least one non-family member, all Singapore tax-resident. 3. Draft the investment mandate to satisfy the enhanced-tier prescribed investment categories. 4. Submit the Section 13U application to MAS with supporting evidence. 5. On approval, maintain annual compliance filings, local spending commitments and staffing levels. 6. Where transitioning from Section 13O, coordinate the changeover to avoid a compliance gap between schemes.
Common mistakes
Families transitioning from Section 13O to Section 13U sometimes underestimate the step up in staffing cost, particularly the requirement for a third investment professional at market salary. Others miscalculate the S$50 million threshold by including illiquid or non-designated assets that MAS does not count toward the qualifying figure. A further common error is failing to plan the transition timeline carefully, leaving a gap where neither scheme’s conditions are fully met.
FAQs
What is the minimum fund size for Section 13U?
At least S$50 million in assets under management, a threshold raised from S$20 million in April 2024.
How many investment professionals does Section 13U require?
At least three, with at least one who is not a family member, all Singapore tax-resident and paid above the MAS salary threshold.
Can a family office move from Section 13O to Section 13U?
Yes, this is a common transition as assets under management grow past the point where the smaller scheme is cost-effective.
Does Section 13U expire?
MAS has extended the scheme to 31 December 2029, with tightened qualifying conditions phased in over that period.
Is Section 13U approval slower than Section 13O?
Both schemes typically take 8 to 12 weeks for MAS review, though 13U applications often need additional lead time to recruit the required third investment professional.
Related guides
For the fund-vehicle side of a larger family office structure, see VCC structures for family office investment vehicles. For staffing considerations, see family office hiring under 13O, 13U and GIP. Readers comparing the two schemes should also see Section 13U enhanced-tier fund scheme – common mistakes and rejection reasons.
Authoritative references: the Monetary Authority of Singapore’s fund tax incentive scheme for family offices, the Inland Revenue Authority of Singapore, and the Singapore Economic Development Board’s Global Investor Programme.
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.