Singapore extends and revises Fund Tax Incentive Schemes

The Monetary Authority of Singapore (MAS) issued a circular on 1 October setting out details of the extension and revisions made to the fund tax incentives schemes available under sections 13D, 13O and 13U of the Singapore Income Tax Act 1947, as well introducing a new incentive for Singapore limited partnership funds under s13OA.

The changes to s13O/OA (Resident Fund Tax Incentive Scheme) and 13U (Enhanced-tier Fund Tax Incentive Scheme) apply to non-Single Family Office (SFO) funds, while the changes to 13D (Offshore Fund Tax Incentive Scheme) apply to both SFO funds and non-SFO funds.

The expiry dates for s13D, 13O and 13U, which were due to finish at the end of 2024, have been extended until 31 December 2029. The Goods and Services Tax (GST) remission and withholding tax (WHT) exemption on interest and other qualifying payments made to non-residents by incentivised funds will also remain in effect and unchanged.

The other key changes to the qualifying and economic conditions for incentives for funds managed by licensed fund managers set out in the MAS circular, are as follows:

• New requirement for fund managers directly managing or advising s13O/OA funds to employ at least two investment professionals (IPs).
• S13D funds will remain self-administered but will be required to be managed by a Singapore fund manager with at least one IP.
• Introduction of a minimum assets under management requirement of SGD5 million for s13O/13OA funds and SGD50 million for s13U funds in Designated Investments (DI) that must be maintained for the life of the fund. Previously there was no minimum fund size.
• With effect from 1 January 2025, the AUM of a fund will be computed using the value of investments held by the fund that qualify as DI rather than the net asset value (NAV) of the fund.
• The introduction of a tiered local business spending requirement for s13O/OA and s13U funds, ranging from SGD200,000 for AUM below SGD250 million to SGD500,000 for AUM above SGD2 billion, at the end of each financial year.
• To provide greater tax certainty, an option is introduced for closed-ended funds to make an irrevocable election for a ‘closed-ended fund treatment’. New funds must make an election at point of application, while existing funds can apply at any time during the life of the fund.
• The condition for s13O and s13U funds to invest according to a MAS-approved investment objective or strategy is removed.
• A grace period is introduced for existing s13O/U funds to meet the revised conditions from financial year 2027.
• For funds established as Singapore limited partnerships under the new s13OA scheme, the economic and qualifying conditions will apply at the partnership level.
• The requirement that a s13O fund cannot acquire the investments prior to the commencement date of the s13O incentive is removed.
• The additional economic criteria for the addition of multiple special purpose vehicles (SPVs) or trading feeders to a S13U Master-SPV/Master-Feeder fund structure are removed.
• The DI list will be updated to clarify that real estate investment funds, in any form, are included.

Singapore’s family office tax incentives offer foreign investors a highly tax efficient route to investors but, as these changes make clear, are also designed to drive local economic activity and make Singapore a more competitive and sustainable investment management hub.

“Singapore’s fund tax incentives schemes present an excellent opportunity for individuals and families to maximise wealth preservation and growth,” said Andrew Galway, Managing Director of Sovereign Management Services in Singapore. “To fully leverage these benefits, however, it is essential to incorporate trusts into your succession planning.

“Trusts not only provide flexibility and control over asset distribution but also ensure seamless intergenerational wealth transfer while maintaining confidentiality. By aligning trusts with the tax incentives, it is possible to achieve both tax efficiency and long-term family governance, safeguarding your legacy for future generations.”

For further information on Singapore’s fund tax incentives schemes or on the use of trusts in succession planning, please contact Andrew Galway below.