The Section 13D offshore fund scheme exempts specified investment income earned by a non-resident fund from Singapore tax, provided the fund is managed or advised by a Singapore-based fund manager and meets the ownership and substance conditions set by the Income Tax Act. Unlike Section 13O and Section 13U, it requires no minimum assets under management and no MAS application.
Raffles Corporate Services works with a panel of corporate and employment law firms; this article is general information, not legal advice.
What Section 13D actually exempts
Section 13D of the Income Tax Act 1947 exempts a defined list of specified income, including dividends, interest, gains on disposal of securities, and certain derivative and alternative-investment gains, earned by a qualifying non-resident fund vehicle. The fund itself does not pay Singapore tax on this income, and there is no requirement that the fund hold a Variable Capital Company (VCC) or company structure specifically, although many managers use a VCC (see the linked VCC Act 2018 guide below on legal personality, which covers how a VCC is constituted as a body corporate for this purpose).
Who this is for
Section 13D suits fund managers who are based in Singapore and who advise or manage offshore fund vehicles, typically Cayman, BVI or Singapore VCC structures, on behalf of investors who are predominantly non-Singaporean. It is commonly the first tax scheme a boutique or emerging manager relies on before graduating to Section 13O once assets under management and local substance grow.
Eligibility and requirements
Three conditions matter most. First, the fund must not be a Singapore tax resident. Second, the fund must not be 100% beneficially owned by Singapore investors; a meaningful proportion of investors should be foreign. Third, the fund must be managed or advised by a fund management company operating in Singapore, typically one holding a Capital Markets Services licence or relying on a relevant exemption. From the financial year ending in 2027, an economic substance condition requiring at least one investment professional based in Singapore is expected to apply to 13D funds, narrowing the gap with the substance tests already used for Section 13O and Section 13U.
Cost and timeline in numbers
There is no minimum AUM threshold for 13D, in contrast to the S$20 million entry threshold for Section 13O and S$50 million for Section 13U. There is no MAS application fee or approval wait, because 13D is self-assessed rather than approved. The scheme was renewed through 31 December 2029 at Budget 2024, giving managers a multi-year runway to plan around. The main recurring cost is the annual tax computation and declaration prepared alongside the fund manager’s own corporate tax return, typically billed as part of a manager’s existing corporate tax compliance engagement rather than as a separate filing.
Step-by-step: claiming the exemption
The process is self-assessment rather than application. A manager first confirms the fund’s residency and ownership profile meet the two structural conditions above. It then documents the specified income streams the fund expects to earn and confirms these fall within the defined list under the Income Tax Act. The first Section 13D declaration is filed together with the fund manager’s own Singapore corporate tax return for the relevant year of assessment, supported by a schedule showing the fund’s income by category. Because there is no MAS gatekeeping step, the discipline sits entirely in getting the self-assessment right and keeping supporting documentation current for IRAS review.
Common mistakes and gotchas
The most frequent error is treating 13D as a blanket exemption rather than an income-by-category one; income outside the specified list, such as certain trading gains not falling within the defined categories, remains taxable. A second common gap is failing to track the incoming economic substance requirement, since managers who have relied on 13D’s light-touch structure for years may not yet have a dedicated Singapore-based investment professional in place ahead of the financial year ending 2027 deadline. A third mistake is assuming 13D and 13O are interchangeable; once a fund’s AUM and investor base justify 13O’s stronger investor and reporting profile, staying on 13D can look like under-substantiation to IRAS on review.
FAQs
Does a 13D fund need to be a Variable Capital Company? No. A 13D fund can be a company, unit trust or limited partnership incorporated in Singapore or offshore, or a Singapore VCC. The exemption attaches to the income and management conditions, not to a specific corporate form.
Is there a minimum AUM for Section 13D? No. This is the key structural difference from Section 13O (S$20 million at entry) and Section 13U (S$50 million), which is why 13D suits smaller or newer managers.
Does 13D require MAS approval? No. It is self-assessed by the fund and its manager, with the declaration filed alongside the manager’s corporate tax return, unlike 13O and 13U which both require a MAS application and approval letter.
What happens if the economic substance condition is not met from FY2027? A fund without at least one Singapore-based investment professional by the applicable financial year risks losing the exemption for that year, so managers currently relying on 13D should begin building local substance well ahead of the deadline.
Can a fund move from 13D to 13O later? Yes, and it is a common progression as AUM grows past the S$20 million entry threshold and the manager wants the reputational and investor-facing benefits of a MAS-approved scheme.
Related guides
For the mechanics of the corporate vehicle many 13D funds use, see how Section 17 of the Variable Capital Companies Act 2018 gives a VCC its own legal personality. Families layering a 13D or 13O fund with a hiring plan for investment staff should also see the eligibility and requirements checklist for family office hiring under 13O, 13U and GIP. Readers weighing 13D against the next tier up should read our companion piece, Section 13D offshore fund scheme: common mistakes and rejection reasons.
Authoritative background: the Monetary Authority of Singapore’s fund tax incentive scheme pages set out how 13D sits alongside 13O and 13U, and IRAS publishes the e-Tax guides that define the specified income categories referenced above.
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.