Singapore’s family office sector has expanded so quickly that a handful of slim provisions of the Income Tax Act 1947, principally Sections 13O and 13U, now govern much of the wealth flowing into the city-state. These tax incentive schemes exempt qualifying fund vehicles from Singapore tax on most investment income, and they have become the structural backbone of nearly every single family office (SFO) established here.
Yet the schemes are not interchangeable. Section 13O and Section 13U serve different sizes of family wealth, demand different levels of operational substance, and impose different ongoing obligations. Choosing the wrong scheme, or working from conditions that have since been superseded, can mean a denied application, a withdrawn incentive, or unexpected tax exposure.
This guide compares Sections 13O and 13U side by side as they stand following the refinements MAS announced on 31 July 2026, which took effect on 1 August 2026. It draws on the latest Monetary Authority of Singapore (MAS) guidelines and the underlying provisions in the Income Tax Act 1947. If you are still weighing whether a family office is the right vehicle in the first place, read our Complete Guide to Setting Up a Family Office in Singapore (2026) first.
One Important Distinction Before the Numbers
There is a trap that catches a great many readers, and a fair number of published guides. MAS applies two different sets of conditions under the same section numbers, depending on who manages the fund.
- SFO funds. Fund vehicles whose assets originate primarily from members of the same family, managed directly by a family office that is exempt from licensing under the Securities and Futures Act 2001. The conditions for these funds were set on 5 July 2023 and refined with effect from 1 August 2026.
- Non-SFO funds. Funds managed by a licensed fund management company. These were revised by a separate MAS circular dated 1 October 2024, effective 1 January 2025, and carry different thresholds.
Everything that follows describes the SFO conditions, because that is the route almost every family takes. The distinction is not academic: the non-SFO conditions set a far lower minimum for Section 13O and impose no capital deployment requirement at all. A family willing to appoint a third-party licensed manager instead of running its own family office therefore faces a materially different compliance burden, and that is a structuring choice worth pricing properly before you commit.
What Sections 13O and 13U Actually Do
Both schemes sit within the fund tax incentive framework administered by MAS in coordination with the Inland Revenue Authority of Singapore (IRAS). In essence, each scheme grants an income tax exemption on specified income derived from designated investments, broadly capital gains, dividends, interest and similar returns from listed and unlisted securities, debt instruments, and most fund interests.
Without the incentive, a Singapore-incorporated fund vehicle would be subject to corporate income tax at the prevailing 17% rate. Our Singapore Corporate Tax 2026 guide walks through how that headline rate normally applies. With 13O or 13U status, qualifying investment returns flow through the structure substantively tax-free in Singapore, and there is generally no withholding tax on distributions to non-resident beneficial owners. The accompanying GST remission and withholding tax exemption run alongside the schemes.
The trade-off is substance. For SFO funds, the fund must be managed directly by a family office in Singapore throughout the year, and the structure must meet minimum thresholds for assets, professionals, local spending and local investment. Both schemes are currently legislated to sunset on 31 December 2029.
Section 13O at a Glance
Section 13O, formerly Section 13R, is the entry-point scheme. It is the more common choice for first-generation single family offices establishing themselves in Singapore.
Eligible vehicle
The fund must be a Singapore-incorporated and tax-resident company. From 1 January 2025, a parallel scheme under Section 13OA extends the same treatment to funds constituted as limited partnerships registered under the Limited Partnerships Act 2008. Its conditions mirror 13O and are applied at the partnership level rather than partner by partner, with each partner then claiming exemption on its share of qualifying income. Section 13OA was introduced with smaller private equity and venture capital funds in mind, but is available to SFO funds on the same thresholds as 13O.
Minimum AUM
S$20 million in designated investments, both at the point of application and at the end of each financial year relating to any year of assessment. This is measured on designated investments specifically, not on total assets, so cash, directly held real estate and other non-qualifying holdings do not count towards the threshold. Before 1 August 2026 the test had to be satisfied continuously, so the move to a year-end test is a useful easing: an intra-year dip no longer puts the award at risk.
Investment professionals
The family office must employ at least two qualifying investment professionals (IPs), of whom at least one must not be a family member of the fund’s beneficial owners. Since 1 August 2026, hiring may be phased: one IP, who can be a family member, at the point of application, with the second in place by the end of the financial year relating to the first year of assessment of the award.
MAS assesses the substance of each role, not the job title. Qualifying IPs are expected to work primarily as portfolio managers, research analysts or traders, with relevant qualifications or a professional certification such as the CFA or CMFAS. Operational, administrative, accounting and tax-support roles do not count, and neither does simply keying in orders. Funds managed by a licensed fund management company face an additional express requirement that each IP be Singapore tax resident and earn more than S$3,500 a month; confirm the current position for SFO funds with your adviser at the point of application.
Local business spending
A tiered annual requirement, pegged to the fund’s AUM in designated investments at each financial year end. The tiers are common to 13O, 13OA and 13U, and are set out in full below. Qualifying local business spending includes salaries paid to Singapore-based staff, professional fees paid to Singapore service providers such as audit, legal, corporate secretarial, tax and custody, and rental of Singapore office space.
Capital deployment requirement
The fund must invest at least the lower of 10% of its AUM in designated investments or S$10 million into qualifying Singapore-linked investments. The detail is set out below and applies equally to 13U.
Banking
The fund must open and maintain a private banking account with a MAS-licensed financial institution, both at the point of application and throughout each basis period.
Section 13U at a Glance
Section 13U is the Enhanced Tier Fund scheme, renumbered from the old Section 13X. It is the larger and more flexible of the two, and the scheme of choice for established families with substantial liquid wealth.
Eligible vehicle
13U is considerably more relaxed on the fund vehicle. The fund can be a Singapore company, a limited partnership, a trust or a foreign-incorporated entity, provided it is managed from Singapore. This flexibility is one of the main reasons sophisticated families choose 13U.
Whether a family-office-managed fund can use a Variable Capital Company (VCC) is a more nuanced question than it first appears, and one where advisers genuinely differ. A VCC must appoint a permissible fund manager under the Variable Capital Companies Act, and whether a single family office relying on the licensing class exemption satisfies that requirement is not settled in practice. Families attracted to a VCC umbrella should have this confirmed specifically before committing to the structure. For a refresher on VCC mechanics generally, see our VCC vs Cayman SPC comparison.
Minimum AUM
S$50 million in designated investments, at the point of application and at the end of each financial year relating to any year of assessment. As with 13O, the year-end test replaced a continuous test on 1 August 2026.
Investment professionals
At least three qualifying IPs, of whom at least one must not be a family member. This non-family requirement has applied to 13U since 18 April 2022 and is not new. Since 1 August 2026, hiring may be phased: two IPs, who can both be family members, at the point of application, with the third in place by the end of the financial year relating to the first year of assessment of the award.
Local business spending and capital deployment
Identical to 13O and 13OA. Both schemes now draw on one common tiered spending table and the same capital deployment test, calibrated in each case against the fund’s own asset base.
Local Business Spending: The Common Tiered Table
From 1 August 2026, the thresholds at which the higher spending tiers bite moved up substantially, while the minimum spending component for the largest funds was tightened. The tiers below apply to 13O, 13OA and 13U funds alike, measured against AUM in designated investments at each financial year end.
| AUM in designated investments at financial year end | Minimum annual spend |
|---|---|
| Under S$250 million | S$200,000 |
| S$250 million to under S$2 billion | S$500,000 |
| S$2 billion or more | S$1,000,000 |
For the bottom band, the entire S$200,000 must be local business spending. For the upper two bands only part of the total needs to be spending in the strict sense: at least S$300,000 in the middle band and at least S$500,000 in the top band. The balance may be made up of eligible donations to local charities and grants to blended finance instruments distributed by Singapore-licensed financial institutions, and each of those is recognised at twice the amount actually spent.
For context, the previous tiers stepped up at S$50 million and S$100 million of AUM. A fund with S$120 million in designated investments faced a S$1 million annual spending floor under the old table and faces S$200,000 under the new one. That is a substantial easing for mid-sized family offices, and it is the single most commercially significant change of the 2026 round.
The Capital Deployment Requirement
Both schemes require the fund to put money to work in Singapore. The fund must invest at least the lower of 10% of its AUM in designated investments or S$10 million in designated investments falling within one of three categories:
- Investments listed on exchanges approved by MAS under Section 9 of the Securities and Futures Act 2001
- Investments distributed by MAS-licensed financial institutions in Singapore, excluding equities listed outside approved exchanges
- Non-listed Singapore-incorporated companies with operating businesses and substantive presence in Singapore
The 2026 refinements streamlined this from six categories to three and simplified the weighting mechanics. Certain investments now count at twice their value towards the test:
- Equities listed on approved exchanges
- Funds investing substantially in Singapore-listed equities
- Blended finance instruments distributed by Singapore-licensed financial institutions
- Non-listed Singapore-incorporated companies with operating businesses and substantive presence in Singapore
On that last category, MAS expects an operating company to be registered in Singapore, to have at least 25% local shareholding, to employ a minimum of three people in Singapore, and to have operating premises here. Entities whose business is trading or holding Singapore immovable property do not qualify, unless they are genuine property developers.
The requirement must be met by the end of the first full financial year after the award commences, and at each financial year end thereafter. Compliance is now assessed on qualifying deployment as a proportion of AUM in designated investments at the end of each basis period, replacing the previous averaging of twelve month-end figures. That makes the position easier to model but less forgiving of a badly timed year end.
Side-by-Side Comparison
| Criterion | Section 13O / 13OA | Section 13U |
|---|---|---|
| Fund vehicle | Singapore-incorporated and resident company (13O); Singapore LP under the Limited Partnerships Act 2008 (13OA) | Any vehicle, Singapore or offshore, managed from Singapore |
| Minimum AUM in designated investments | S$20 million at application and at each financial year end | S$50 million at application and at each financial year end |
| Minimum investment professionals | 2, at least one non-family | 3, at least one non-family |
| Phased IP hiring | May start with 1, second in place by the end of the FY relating to the first YA | May start with 2, third in place by the end of the FY relating to the first YA |
| Annual local business spending | Common tiered table: S$200,000, S$500,000 or S$1,000,000 by AUM band | Same |
| Capital deployment | Lower of 10% of AUM in DI or S$10 million; three eligible categories; 2x weighting available | Same |
| Banking | Private banking account with a MAS-licensed financial institution | Same |
| Management | Managed directly by the family office in Singapore throughout the year | Same |
| Tax outcome | Exemption on specified income from designated investments | Exemption on specified income from designated investments |
| Approval regime | MAS application required | MAS application required |
| Scheme expiry | 31 December 2029 | 31 December 2029 |
The Single Family Office Licensing Framework
The tax incentive is only half the picture. Since 15 June 2026, family offices operating in Singapore have come under a revised licensing framework, and any family setting up now needs to plan for both at once.
MAS replaced the old patchwork of related-corporation exemptions and case-by-case approvals with a single, structure-agnostic class exemption from licensing under the Securities and Futures Act 2001, set out at paragraph 5(1)(ba) of the Second Schedule to the Securities and Futures (Licensing and Conduct of Business) Regulations. The practical obligations are these:
- Incorporation. The family office must be incorporated in Singapore.
- Family scope. The common ancestor must be no more than five generations removed from the youngest generation establishing the family office. Key employees may hold up to 10% of the family office and contribute up to 10% of assets under management.
- Banking. The family office and each of its fund vehicles must open and maintain an account with a MAS-licensed bank. A foreign-incorporated fund vehicle may instead use a regulated bank in a jurisdiction whose anti-money laundering standards are consistent with those set by the Financial Action Task Force.
- Notification. A new family office must file a Notice of Commencement of Business with MAS within 14 days of starting operations. Family offices already operating before 15 June 2026 under a previous exemption have until 15 June 2027 to file a Notice of Continuation of Business.
- Annual return. Due within four months of the family office’s financial year end. MAS has said no extensions will be granted.
- Designated contact person. The family office must at all times have an employee ordinarily resident in Singapore, meaning primarily based here with a Singapore residential address, as its point of contact with MAS.
Notably, MAS dropped the legal opinion requirement that had featured in its consultation proposal, so the filing itself is lighter than the industry expected. MAS has also indicated it will generally not grant case-by-case exemptions from here except in exceptional cases.
Which Scheme Should Your Family Choose?
The decision usually comes down to four practical factors: investible wealth, intended structure, family size, and appetite for substance.
1. Investible wealth
The thresholds largely make this decision for you. Below S$50 million in designated investments, 13O or 13OA is the only option, and you need S$20 million of qualifying assets in place at application. Once AUM is comfortably above S$50 million and likely to grow, 13U comes into range. Since the 2026 refinements aligned the spending and deployment requirements across both schemes, the case for 13U now rests on vehicle flexibility rather than on any difference in running cost.
2. Intended structure
If the family needs a trust, a foreign-incorporated vehicle or a multi-vehicle arrangement, 13U is the natural fit, because 13O and 13OA are confined to a Singapore company and a Singapore limited partnership respectively. If a VCC umbrella with sub-funds is the goal, take specific advice first for the reasons set out above.
3. Family size and complexity
Multi-generational or multi-branch families with several decision-makers are typically pushed toward 13U, largely because three investment professionals reflect the governance such families already need. Single-couple family offices with simpler arrangements often stay in 13O. Bear in mind that both schemes require a non-family investment professional, so the days of an entirely family-staffed investment team are behind us either way.
4. Substance appetite
13U requires a third investment professional and a larger qualifying asset base. Families that genuinely want to anchor their economic life in Singapore, and may also be exploring the Global Investor Programme for residency or PR pathways, will find those levels easier to absorb. Those treating Singapore as one node in a multi-jurisdiction setup may prefer the lighter 13O footprint.
How the Rules Have Changed: 2022, 2023 and 2026
The conditions for SFO funds have been revised twice, and a third time partially, which is why so much of the material circulating online is out of date. The sequence matters, because which set applies to you depends on when your award was granted.
18 April 2022. MAS introduced minimum fund sizes and headcount for the first time. Section 13O required S$10 million at application with a commitment to reach S$20 million within two years, and two investment professionals. Section 13U kept its S$50 million floor and gained a requirement for three IPs including one non-family member. Both picked up the capital deployment requirement and a tiered spending framework.
5 July 2023. The two-year escalation was scrapped. Section 13O moved to a flat S$20 million in designated investments to be met at application and maintained, and its second IP requirement was tightened so that at least one of the two must be a non-family member. The tiered spending tables were raised.
1 August 2026. Following Circular FDD Cir 05/2026, issued on 31 July 2026, MAS refined the conditions in a way that cuts both ways. The easings are real: phased IP hiring, spending tier thresholds moved from S$50 million and S$100 million up to S$250 million and S$2 billion, a capital deployment test streamlined from six categories to three, and removal of the 5% portfolio cap on physical investment precious metals, which now lets families hold considerably more physical gold as a designated investment. MAS also confirmed that tokenised interests in designated investments can qualify, provided they confer the same rights and obligations as direct ownership.
Set against that, the AUM test is now formally assessed at each financial year end, the minimum spending component for the largest funds rose, capital deployment is measured at basis period end rather than averaged across the year, and the private banking account condition was made explicit for all awards.
If you already hold an award, which changes reach you depends on your vintage. Awards granted under the pre-18 April 2022 conditions are unaffected. Awards on the 18 April 2022 conditions pick up the revised spending and deployment rules. Awards on the 5 July 2023 conditions pick up the revised AUM, spending and deployment rules. In each case the changes take effect from the year of assessment whose basis period ends on or after 1 August 2026. Any awardee whose letter did not mention a Singapore banking requirement was given three months from 1 August 2026 to open one.
Application Process and Timing
Applications for both schemes are submitted to MAS, typically through the family office company once it is incorporated and has appointed its key personnel. A complete submission usually includes the family tree and source-of-wealth narrative, the proposed investment policy statement, the structure chart, the IP profiles, and the projected local business spending.
In our experience, families should budget several months from a complete filing to award, and considerably longer where the structure is complex or the source of wealth requires extensive documentation. Pre-application engagement with MAS, often via a written submission summarising the family, structure and policy, is worth the effort for 13U cases and for any 13O case involving operating businesses, non-financial assets or unusual jurisdictional flows.
MAS has also intensified its scrutiny of source-of-wealth documentation and economic substance. Expect searching questions about the origin of capital, the family’s real-world activities, and the rationale for choosing Singapore.
Run the licensing notification in parallel. A new family office must notify MAS within 14 days of commencing business, so that obligation will usually fall due well before the tax incentive award is decided.
Most families also need supporting infrastructure: a Singapore-resident director, which is a statutory requirement under the Companies Act 1967, a registered office, a corporate secretary, audited annual financial statements, and the Singapore-resident designated contact person the licensing framework requires. If you do not yet have a resident director on the family team, our Singapore PR application guide covers the immigration pathways that can solve this longer-term, while a nominee director arrangement can bridge the gap in the interim.
Common Pitfalls
The most frequent reasons applications stumble or incentives are later withdrawn are familiar across both schemes.
Underestimating local business spending remains near the top of the list, though the pressure point has moved. The steps now sit at S$250 million and S$2 billion of AUM in designated investments, not S$50 million and S$100 million, so a fast-growing mid-sized fund has far more headroom than it did before August 2026. Families working from older guidance sometimes over-provision here instead.
Confusing total assets with designated investments is a subtler trap. A family with S$40 million in total wealth may hold well under S$20 million in qualifying designated investments once directly held property and idle cash are stripped out, and only the latter counts towards the threshold.
Treating the capital deployment requirement as optional rather than a hard floor is another recurring issue, particularly for families whose investment philosophy is heavily offshore. The 2x weighting on Singapore-listed equities and qualifying local operating companies makes this materially easier to satisfy than many expect, so it rewards deliberate planning.
On the people side, employing investment professionals who do not actually make investment decisions is a red flag MAS now actively probes, and the non-family requirement applies to both schemes. On the structural side, mixing personal assets, operating businesses and the incentivised fund inside a single entity tends to invite disqualification of the non-fund income from the scheme, and can complicate IRAS reviews years later.
Finally, do not overlook the licensing side. Missing the 14-day notification window, or the four-month annual return deadline on which MAS has said it will grant no extensions, creates a regulatory problem quite separate from the tax award.
Conclusion
Sections 13O and 13U remain the most attractive family office tax frameworks in Asia, and the August 2026 refinements have made them more workable for mid-sized families rather than less. What has not softened is the expectation of real economic activity. The families that thrive under the schemes anchor genuine substance here: real professionals, real spending, and capital deployed meaningfully into the Singapore economy.
Choosing between 13O and 13U is rarely a close call once the numbers are on the table. Below S$50 million in designated investments, 13O or 13OA is the practical choice, subject to clearing the S$20 million floor. Above S$50 million with a multi-vehicle ambition, 13U almost always wins. Now that both schemes share the same spending and deployment requirements, the harder questions are about vehicle choice, governance, and how the family wants to live and operate in Singapore over the next decade.
Requirements may change, so always check the latest guidance from ACRA, IRAS or MAS, or consult a professional adviser.
If you are evaluating either scheme, or are an existing 13O fund considering whether to migrate up to 13U, Raffles Corporate Services can guide you through the full lifecycle, covering incorporation, MAS engagement, the licensing notification and annual return, IRAS compliance, ongoing spending and deployment tracking, and the corporate secretarial backbone that keeps the structure compliant year after year.
Last reviewed: September 2026, reflecting MAS Circular FDD Cir 05/2026 and the revised Single Family Office framework.
The Editorial Team, Raffles Corporate Services
Disclaimer: This does not constitute legal or tax advice. If you require advice on your own circumstances, please contact a qualified professional adviser.