GST Remission for Singapore Funds: How the Fixed Recovery Rate Actually Works

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

Every family office CFO who has sat through an audit of a 13O or 13U fund knows the moment: the auditor flags a line of unclaimed GST sitting inside the management fee, the custodian invoice, or the legal bill for the last capital call, and asks why nobody is recovering it. The fund is not GST-registered, so the instinct is to write the GST off as a cost. That instinct is usually wrong, and the amount left on the table compounds every year.

Singapore’s GST remission for qualifying funds exists precisely to fix this. It lets a fund that would otherwise absorb GST as an unrecoverable cost claim back a fixed proportion of it, on a defined set of prescribed expenses, without ever registering for GST. Our existing walkthroughs of the Section 13O tax incentive scheme and the Section 13U enhanced-tier fund scheme mention this remission in passing. This article is the deep-dive those pages point to: what the remission is, who qualifies, how the fixed recovery rate works mechanically, and what a fund administrator needs to do to claim it correctly.

Get this wrong in either direction and it costs money. Under-claim, and the office is quietly funding IRAS with GST it was entitled to recover. Over-claim, and the fund is exposed on a future review for a period when it was never even GST-registered.

What the GST remission for funds actually is

Ordinarily, only a GST-registered business can recover the GST it pays on its purchases (input tax) against the GST it charges on its supplies (output tax). A fund vehicle earning investment income typically makes no taxable supplies, so it has no output tax to offset against, and no basis to register for GST at all. Left unaddressed, every dollar of GST charged by the fund administrator, the auditor, the custodian and the lawyers would simply be an added cost of running the fund.

IRAS addresses this with a standing remission, currently extended through 31 December 2029, that allows qualifying funds to recover GST incurred on prescribed expenses at an annual fixed recovery rate, even though the fund itself is not GST-registered. The fund, or its administrator, trustee or manager on its behalf, totals the GST charged on qualifying invoices for a claim period, applies the fixed recovery rate published by IRAS for that year, and submits a Statement of Claims. Nothing about this changes the fund’s GST registration status; the remission is a refund mechanism layered on top of non-registration.

Why a fixed rate, rather than full recovery

A GST-registered business recovers input tax supply by supply, dollar for dollar, subject to the usual exclusions. Funds do not get that treatment: IRAS instead applies a single fixed percentage to all qualifying GST across the claim period, reflecting a broad estimate of what a fund’s recoverable proportion would look like under a full apportionment exercise. The trade-off is simplicity for precision: no partial exemption calculation per invoice, but also no recovery of 100% of the GST incurred, even on expenses unambiguously for the fund’s investment activities.

Which structures actually qualify

The remission is not open to every investment vehicle with “fund” in its name. It is tied to the specific income tax concessions under the Income Tax Act 1947, and a vehicle only qualifies for the GST remission if it also qualifies for, and maintains, the relevant income tax concession. The main routes are:

• Section 13D: the offshore fund exemption, for funds not resident in Singapore that do not need MAS approval;
• Section 13O: the onshore fund exemption for a company incorporated and tax-resident in Singapore, including a non-umbrella VCC, covered in our 13O walkthrough;
• Section 13OA: extends the 13O framework to Singapore limited partnerships registered under the Limited Partnership Act 2008;
• Section 13U: the enhanced-tier scheme for larger, vehicle-agnostic funds (companies, VCCs, foreign entities, limited partnerships and trusts), covered in our 13U walkthrough;
• Section 13V: the exemption for prescribed sovereign fund entities, approved foreign government-owned entities and approved international organisations.

Variable Capital Companies deserve a specific mention. A qualifying umbrella VCC and its sub-funds are each treated separately for the remission, so a non-GST-registered qualifying sub-fund can claim back GST on its own prescribed expenses, provided the sub-fund itself, not merely the umbrella, satisfies the underlying conditions. Readers building a multi-strategy platform should read this alongside our VCC guide, since sub-fund segregation affects how claims and undertakings are organised across the umbrella.

The common thread: the fund must be managed by a prescribed fund manager in Singapore, approved under the MAS fund tax incentive scheme where applicable, and satisfy its income tax concession conditions as at the last day of the preceding financial year. A fund that loses its 13O or 13U status, even temporarily, loses GST remission eligibility for the same period.

How the fixed recovery rate mechanism actually works

The rate itself is not fixed forever. IRAS reviews it periodically, historically annually, and publishes the applicable percentage in its e-Tax guide and explanatory notes on the remission. Professional-services summaries of past IRAS guidance record the rate at 91% for calendar year 2023, moving to 90% for calendar year 2024, illustrating that it moves and should not be assumed from a prior year’s filing. Because it can change, this article deliberately does not state the current rate: pull the live figure from IRAS’s published e-Tax guide on the Finance sector before preparing any Statement of Claims, rather than relying on a number quoted in a blog post or last year’s workpaper.

Once the applicable rate for the period is confirmed, the arithmetic is simple:

Total GST claimable = Total GST incurred on prescribed expenses for the period x the fixed recovery rate published by IRAS for that period.

A few mechanical points matter. Claims are normally made through periodic Statements of Claims, covering a half-year or full year rather than transaction by transaction. All invoices claimed within the same year should use that year’s recovery rate; a fund should not mix rates from different calendar years within one claim without careful documentation. And a fund must maintain a purchase listing, invoice by invoice, showing the tax invoice date, invoice number, supplier’s GST number, supplier name, expense description, value before GST and GST amount, producible to IRAS on request. This is the evidentiary basis for the claim, not optional record-keeping.

Timing: when a fund can start claiming

Eligibility runs with the fund’s income tax concession status: broadly, a fund can claim GST incurred once it satisfies the conditions for its specific income tax concession as at the last day of the preceding financial year. Newly established funds without a preceding year, and funds that narrowly miss the minimum spending requirement in their first year but meet it in their second, benefit from administrative concessions allowing that year’s GST to be claimed once the condition is later satisfied. Do not assume pre-approval GST is automatically lost, or automatically recoverable, without checking which concession applies.

Which expenses qualify: the prescribed expenses test

The remission covers GST on expenses incurred for the fund’s qualifying investment activities, subject to the standard exclusions under the GST (General) Regulations, principally the block on club subscriptions, medical and accident insurance, family benefits, and motor cars. The table below sets out how this typically plays out.

That last row is where administrators most often stumble. Suppliers frequently invoice the trustee, umbrella fund, or fund manager rather than the individual sub-fund, particularly for shared services. IRAS allows a limited concession here, but only where the expenses are recognised in the fund’s own accounts, paid from its own bank account, supported by a letter showing the portion allocated to the fund and referencing the original tax invoice, and accompanied by a signed undertaking that the GST has not and will not be claimed twice. Skipping the undertaking, or the allocation letter, is the most common reason a claim gets unwound on review.

Interaction with fund management fee GST treatment

Fund management fees sit at the intersection of two GST rules. Where the manager is Singapore-based and GST-registered, its fee is generally standard-rated, and the fund bears the GST as the largest single item in its prescribed expenses, recoverable through the remission. Where the fund instead contracts with, or imports services from, an overseas manager or group entity, it may separately need to self-account for GST under the reverse charge regime, covered in our guide to GST reverse charge for imported services. Keep the two distinct: reverse charge GST is a separate liability from GST recovered through the remission, and should not be conflated in the same working paper.

Practical guidance for the fund administrator or family office

A few habits separate offices that recover what they are entitled to from those that either under-claim or create audit risk:

• Confirm the fund’s income tax concession status as at the last day of the preceding financial year before preparing any claim; remission eligibility is derivative of that status;
• Pull the current fixed recovery rate directly from IRAS’s published e-Tax guide at the time of each claim, rather than reusing a prior period’s rate;
• Maintain the purchase listing invoice by invoice as the claim is prepared, rather than reconstructing it under time pressure at year end;
• Chase allocation letters and signed undertakings the moment an invoice arrives addressed to the trustee, umbrella fund or manager rather than the fund itself;
• Treat any change in the fund’s approval status, AUM or investment professional headcount as a trigger to re-check GST remission eligibility, not only the income tax position.

For administrators managing several vehicles across 13O, 13U and umbrella VCC structures, the cleanest approach is a single standing checklist per entity, refreshed each claim period and tied back to the same conditions tracked for the MAS annual declaration. Offices that run tax incentive compliance and GST claims as disconnected workstreams are the ones most likely to discover a mismatch only when IRAS or an auditor asks a pointed question. Family offices building their operating model from scratch may also find our single family office setup FAQ useful for how compliance responsibilities typically divide.

Conclusion

The GST remission for qualifying funds is not a footnote to the 13O or 13U incentive; for an office spending six figures a year on management, custody, audit and legal fees, it is a recurring recovery that is easy to under-claim and mildly awkward to over-claim. The mechanics are well documented by IRAS: confirm eligibility through the underlying income tax concession, apply the current published fixed recovery rate to GST incurred on prescribed expenses, and keep the documentary trail, including undertakings for third-party-addressed invoices, in the exact form IRAS expects. Get it right once and it becomes routine rather than a source of year-end surprises. If your family office or fund administrator would like a second set of eyes on your GST remission position, get in touch with Raffles Corporate Services through www.rafflescorporateservices.com.

The Editorial Team, Raffles Corporate Services