Singapore has become a leading hub for asset and fund management, attracting global investors with its pro-business environment and favourable tax regime. A cornerstone of this growth is the government’s introduction of targeted tax incentives under the Income Tax Act. These schemes are designed to encourage fund managers to base their operations in Singapore, while also deepening the local financial ecosystem.
This article explains the key schemes- Sections 13D, 13O, and 13U; and what expatriates, investors, and fund managers should know before applying.
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1. Offshore Fund Tax Exemption (Section 13D)
The Section 13D exemption aims to attract foreign investors who wish to engage Singapore-based managers while maintaining funds offshore.
Key Features:
- Applies to companies, trusts, and individuals.
- Exempts specified income (SI) derived from designated investments (DI).
- No application required to MAS.
- No minimum fund size or local expenditure threshold.
Eligibility Conditions:
- The fund must not be resident in Singapore.
- It must be managed by a Singapore-based manager holding (or exempt from holding) a Capital Markets Services (CMS) licence.
Why it Matters:
Section 13D is particularly attractive for new fund managers and foreign investors who are testing the market. It offers flexibility without the burden of initial capital requirements.
2. Onshore Fund Tax Exemption (Section 13O)
Introduced to encourage Singapore-incorporated funds, Section 13O applies to local companies; including Variable Capital Companies (VCCs).
Key Requirements:
- Fund size of at least S$10m (to grow to S$20m within 2 years).
- At least two investment professionals employed.
- Minimum S$200,000 annual local business spending.
- At least 10% of AUM or S$10m invested in local assets (grace period of 1 year).
Process:
- Application to MAS is mandatory.
- Approval required for fund scheme and changes.
Why it Matters:
Section 13O is ideal for family offices and localised fund structures looking to benefit from Singapore’s ecosystem while committing to local investment.
3. Enhanced-Tier Fund Tax Exemption (Section 13U)
The most comprehensive scheme, Section 13U accommodates both onshore and offshore funds and allows the broadest range of structures.
Key Requirements:
- Minimum fund size of S$50m.
- At least three investment professionals, including one non-family member.
- Higher local business spending thresholds (S$500,000–S$1,000,000).
- At least 10% of AUM or S$10m invested locally.
Why it Matters:
Section 13U is suited for large-scale funds seeking global investors, as it signals robust compliance and strong commitment to Singapore.