On 19 August 2026, the Monetary Authority of Singapore (MAS) unveiled its Asset Management Hub package, a suite of measures designed to keep Singapore at the front of the queue for global fund managers deciding where to base their next fund. Buried inside the announcement was a proposal that fund managers across the industry have been asking for since well before the pandemic: a tax exemption for carried interest and other profit-related returns earned from managing qualifying funds.
For principals of family offices, private equity sponsors, hedge fund managers and venture capital general partners operating out of Singapore, this is not a minor technical tweak. Carried interest, the share of a fund’s profits paid to the manager once investors have received their return of capital and a hurdle rate, has historically sat in a grey zone under Singapore tax law, sometimes taxed as income, sometimes contested as capital gains, and frequently the subject of advance ruling requests to the Inland Revenue Authority of Singapore (IRAS). A dedicated exemption would remove much of that uncertainty at a stroke.
But there is an important word that business owners and fund managers should hold onto throughout this article: proposed. MAS and the Ministry of Finance (MOF) have signalled the direction of travel, and have given an indicative year of assessment, but the actual legislation, with its detailed conditions, definitions and anti-avoidance safeguards, is expected only at Budget 2027. Anyone restructuring a fund or a management agreement today on the assumption that the exemption is already law would be getting ahead of the facts. This article sets out what has actually been announced, who it is likely to affect, and how to prepare sensibly while the details are still being worked out.
What MAS Actually Announced on 19 August 2026
The Asset Management Hub package announced by MAS on 19 August 2026 comprises three main strands: a proposed tax exemption for qualifying profit-related returns earned from fund management services, a new Hedge Fund Investment Programme under which MAS will invest alongside hedge fund managers who commit to deepening their Singapore presence, and a new Investment Management Track under the Overseas Networks and Expertise (ONE) Pass framework to ease the immigration path for senior investment talent. This article focuses on the tax exemption; the Hedge Fund Investment Programme is a separate initiative that deserves its own treatment and is covered elsewhere.
On the tax side, MAS and MOF have indicated that the exemption is intended to cover a contractual share of fund profits received, directly or indirectly, by companies, partnerships or individuals for the provision of fund management services, where that share arises because the fund has outperformed a benchmark or hurdle. This is meant to capture the traditional forms of carried interest and profit or returns-sharing arrangements used across private equity, venture capital and hedge fund structures. Ordinary salaries, bonuses and other employee remuneration are explicitly carved out and will not qualify, regardless of how performance-linked they are.
Two conditions matter most for planning purposes. First, the fund itself must already qualify under one of Singapore’s existing fund tax incentive schemes under the Income Tax Act 1947, namely sections 13D, 13O, 13OA, 13U or 13V. Second, the fund must meet the economic substance conditions attached to those schemes, including minimum headcount and business spending requirements, and must be managed by a Singapore-based fund manager. In other words, this is not a stand-alone incentive that a manager can access independently; it rides on top of the existing fund incentive architecture, and a manager whose fund does not already qualify under 13D, 13O, 13OA, 13U or 13V will need to fix that first.
Effective Date: Year of Assessment 2027
The exemption is expected to take effect from Year of Assessment (YA) 2027, which broadly corresponds to income earned in the 2026 financial year for most calendar-year entities, though the precise basis period rules will only be confirmed with the legislation. Crucially, the detailed conditions, including how “qualifying profit-related returns” will be defined, what documentation will be required, and whether there will be any cap or holding period requirement, are expected to be released only at Budget 2027, which typically falls in February. Fund managers should treat everything before that date as a policy direction rather than a filed law.
Which Fund Schemes Are Affected
Because the proposed exemption is anchored to the existing fund tax incentive schemes, it is worth being precise about which structures are in scope. The table below summarises the schemes named in the MAS announcement, all found in the Income Tax Act 1947.
| Scheme | Typical use case | Relevance to the carried interest proposal |
|---|---|---|
| Section 13D | Offshore fund exemption for non-resident funds managed from Singapore | Named as a qualifying scheme; no MAS application is required for the underlying exemption itself |
| Section 13O | Onshore (resident) fund scheme, commonly used by Singapore-incorporated funds and family offices | Named as a qualifying scheme; fund must meet minimum asset and professional headcount thresholds |
| Section 13OA | Extension of the 13O regime to Singapore limited partnerships registered under the Limited Partnership Act, aimed at smaller private equity and venture capital vehicles | Named as a qualifying scheme; relevant to early-stage venture and private equity general partners |
| Section 13U | Enhanced-tier fund scheme for larger or institutional funds, with higher asset and headcount requirements and no investor-residency restriction | Named as a qualifying scheme; the most common route for larger single family offices and institutional-scale managers |
| Section 13V | Exemption for prescribed sovereign fund entities and approved foreign government-owned entities | Named as a qualifying scheme, extending the proposal’s reach to sovereign and quasi-sovereign vehicles |
Readers already familiar with the 13O and 13U regimes will recognise these as the same schemes that govern family office and fund tax exemptions more generally. Our existing walkthroughs on the Section 13O tax incentive scheme and the Section 13U enhanced-tier fund scheme remain the right starting point for understanding the underlying qualifying conditions, since the carried interest exemption does not replace them, it sits on top.
Why This Matters for Fund Managers and Family Offices
For a private equity or venture capital general partner, carried interest is often the single largest component of long-term economic return, dwarfing management fees over the life of a successful fund. Historically, structuring carried interest out of Singapore has required careful drafting of the fund’s limited partnership agreement or shareholders’ agreement, and in some cases separate advance rulings, to support capital gains treatment rather than income treatment. A codified exemption, once legislated, would reduce that structuring burden and bring Singapore’s treatment closer to jurisdictions that have long offered dedicated carried interest concessions.
For single family offices operating under a 13O or 13U structure, the practical impact may be more limited if the family office itself does not charge a performance fee, but principals who also act as fund managers for external capital, or who run a hybrid family office and third-party fund model, should watch this closely. Anyone contemplating a new fund structure, or a Variable Capital Company (VCC) umbrella with multiple sub-funds, should factor the proposed exemption into their planning horizon, while accepting that the final legislated conditions may differ from the initial policy announcement.
It is also worth noting that a manager providing fund management services in Singapore will typically require a Capital Markets Services licence or registration from MAS in the first place. Managers who have not yet confirmed their licensing position should read our guide to the MAS Capital Markets Services (CMS) licence before assuming the carried interest exemption will apply to them, since the underlying licensing and fund qualification conditions are unaffected by the new proposal.
The Regional Context: Hong Kong’s Own Carried Interest Push
Singapore is not making this move in a vacuum. Hong Kong has, over the course of 2026, been advancing its own legislative changes to broaden its existing carried interest tax concession regime, extending preferential treatment beyond private equity into other asset classes and, according to press and professional-firm commentary, streamlining some of the certification and hurdle-rate requirements that fund managers had found burdensome. Those Hong Kong changes remain subject to passage through the Legislative Council and are not yet settled law at the time of writing, so any comparison should be treated as directional rather than a precise like-for-like benchmark.
The broader point for a Singapore-based fund manager is strategic rather than arithmetic: both hubs are competing for the same pool of mobile fund management talent and capital, and both are using tax policy on carried interest as one lever in that competition. Singapore’s proposal, alongside the new Hedge Fund Investment Programme and the Investment Management Track under the ONE Pass, should be read as part of a coordinated push to keep the city competitive, rather than as an isolated tax measure.
What Fund Managers Should Do Now
Given that the detailed legislation is not expected until Budget 2027, the sensible posture for most fund managers is preparation rather than restructuring. In practical terms, that means:
- Confirming that the fund is, or can be, properly qualified under section 13D, 13O, 13OA, 13U or 13V, since the carried interest exemption will only be available to funds within those schemes.
- Reviewing the economic substance conditions attached to the relevant scheme, including local headcount and business spending, given that these conditions are expected to remain a gateway requirement for the new exemption.
- Documenting existing carried interest and profit-sharing arrangements clearly, distinguishing performance-linked profit shares from ordinary remuneration, so that the eventual legislated definition can be applied cleanly.
- Avoiding any restructuring undertaken solely on the assumption that the exemption is already in force, since the conditions announced in August 2026 are a policy proposal, not enacted law.
- Speaking with a corporate services or tax adviser before Budget 2027 so that any necessary fund or management agreement adjustments can be made promptly once the legislation is tabled.
Family offices and fund managers considering whether their current structure, whether a 13O onshore fund or a 13U enhanced-tier vehicle, is best placed to benefit from the proposed exemption may also find it useful to revisit our comparison of Section 13O versus Section 13U family office tax schemes, and our answers to common questions on setting up a Single Family Office in Singapore, both of which touch on the qualifying conditions that will underpin eligibility for the new exemption.
Conclusion
MAS’s Asset Management Hub package is a clear statement of intent: Singapore wants to remain the natural home for fund managers in Asia, and it is prepared to use tax policy on carried interest, alongside new investment programmes and immigration pathways, to make that case. For fund managers and family offices, the announcement is a strong signal to plan ahead, but not yet a green light to assume the exemption is locked in. The real detail, and the real planning opportunity, will come with the legislation expected at Budget 2027.
If you manage a qualifying fund, or you are weighing up whether a 13O, 13OA, 13U or VCC structure is the right vehicle for your next fund, now is a sensible time to review your structure ahead of the legislated changes. Speak to the team at Raffles Corporate Services to assess how the proposed carried interest exemption may apply to your fund once the details are confirmed.
The Editorial Team, Raffles Corporate Services