Section 13O tax incentive scheme – full lifecycle – Frequently asked questions
The Section 13O tax incentive scheme is Singapore’s onshore fund tax exemption under the Income Tax Act 1947, allowing a qualifying fund vehicle, typically a single family office, to exempt specified income from tax provided it meets minimum asset, staffing and local spending conditions set by the Monetary Authority of Singapore.
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 13O tax incentive scheme?
Section 13O of the Income Tax Act 1947 (formerly numbered Section 13R) exempts specified income of an approved company incorporated and resident in Singapore from tax, where that company is managed by a Singapore-based fund manager. It is the scheme most single family offices use because, unlike Section 13U, it does not require the fund to be managed by a licensed or exempt fund manager with a wider client base, only that the SFO itself hold and manage the family’s assets.
Who is Section 13O for?
Section 13O suits family offices and smaller fund vehicles with at least S$20 million in designated investments, required in full from the point of application since 1 January 2025 with no ramp-up period. Families expecting to grow beyond S$50 million in assets under management typically plan an eventual transition to Section 13U rather than starting there directly, since 13U carries higher compliance costs that are easier to justify at scale.
Eligibility and requirements across the full lifecycle
At application, the fund must hold at least S$20 million in designated investments, required in full from the outset since 1 January 2025 (previously S$10 million with a two-year ramp-up to S$20 million, now discontinued). This minimum must also be maintained at the end of each subsequent financial year; falling below it means the tax exemption cannot be claimed for that period, though it can resume once the fund again satisfies the conditions. The fund must employ at least two investment professionals, at least one of whom is not a member of the family, and all must be Singapore tax-resident and remunerated above the MAS-prescribed salary threshold for their role. The fund must also incur minimum local business spending of S$200,000 per year, and deploy the lower of 10% of its AUM or S$10 million into prescribed local investment categories, including Singapore-listed equities, qualifying bonds, funds distributed by Singapore-licensed or registered managers, and climate-related investments. The scheme has been extended by MAS to 31 December 2029, with tightened qualifying conditions phased in over that period.
Cost and timeline
Application review by MAS typically takes 8 to 12 weeks from a complete submission. Setup costs commonly include incorporation (from S$1,000), fund administration and accounting (from S$18,000 per year), and the two investment professionals’ salaries, each of which must clear the applicable MAS salary benchmark. Ongoing compliance includes an annual declaration of continued eligibility and, from 15 June 2026, a separate MAS notification under the family office licensing exemption framework where the vehicle is an SFO.
Step-by-step process
1. Confirm the family’s investable assets meet or exceed the S$20 million designated-investment threshold. 2. Incorporate the fund vehicle and appoint the two required investment professionals. 3. Draft the investment mandate to satisfy the prescribed local-investment categories. 4. Submit the Section 13O application to MAS with supporting staffing and mandate evidence. 5. On approval, maintain annual compliance filings and the local business spending commitment. 6. Where the vehicle is an SFO, separately file the MAS family office notification.
Common mistakes
The most frequent rejection reason is understating the local business spending commitment or overstating investment professional remuneration without supporting payslips. Some applicants also assume family members automatically qualify as investment professionals without meeting the non-family-member headcount requirement. Others fail to re-test the S$20 million designated-investment threshold at each financial year end, only realising a shortfall at the point of an audit or MAS review.
FAQs
What is the minimum fund size for Section 13O?
At least S$20 million in designated investments, required in full from application since 1 January 2025, with no ramp-up period.
How many staff does a Section 13O fund need?
At least two investment professionals, with at least one who is not a family member, both Singapore tax-resident and paid above the MAS salary threshold.
How long does Section 13O approval take?
Typically 8 to 12 weeks from a complete application.
Does Section 13O expire?
MAS has extended the scheme to 31 December 2029, though qualifying conditions are being tightened over that period.
Is Section 13O the same as the MAS family office licensing exemption?
No. Section 13O is a tax exemption administered under the Income Tax Act 1947; the licensing exemption is a separate MAS notification requirement that took effect on 15 June 2026 for qualifying single family offices.
Related guides
For the fund-vehicle side of a family office structure, see VCC structures for family office investment vehicles. For staffing family members into the office, see family office hiring under 13O, 13U and GIP. Readers weighing up the two schemes should also see Section 13O tax incentive scheme – full lifecycle – 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.