Section 13O vs 13U: Comparing Singapore’s Family Office Tax Incentives (2026 Guide)

Singapore has established itself as the leading family office domicile in Asia, with over 2,000 family offices established under the Monetary Authority of Singapore’s (MAS) tax incentive framework. At the heart of that framework are two tax exemption schemes — Section 13O and Section 13U of the Income Tax Act 1947 — which together make Singapore one of the world’s most tax-efficient locations for managing family wealth.

Both schemes provide exemption from Singapore income tax on qualifying investment income. But they differ materially in their requirements, minimum fund sizes, AUM thresholds, and the obligations they impose on the fund management company. Choosing the right scheme — or determining whether your family office qualifies for either — requires a careful analysis of your specific circumstances.

This guide explains how Section 13O and Section 13U work, sets out their key differences side by side, and walks through the practical steps involved in applying for each. For a broader overview of setting up a family office in Singapore, see our Complete Guide to Setting Up a Family Office in Singapore (2026).

Overview: What Are the 13O and 13U Schemes?

Both schemes are administered by MAS and provide income tax exemption on “specified income” derived from “designated investments” — a broad category that includes equities, bonds, unit trusts, derivatives, real estate investment trusts, and a range of other financial instruments listed in the Income Tax (Exemption of Income of Approved Companies Arising from Funds Managed by Fund Manager in Singapore) Regulations.

The schemes were extended by the Singapore government to 31 December 2029, providing long-term certainty for existing and prospective family offices.

Section 13O: The Onshore Fund Tax Exemption Scheme

Section 13O (formerly Section 13R) is designed for Singapore-resident companies. The fund vehicle must be a Singapore-incorporated company (or a Singapore Variable Capital Company — see our VCC vs Cayman SPC guide). It is typically used by single-family offices where the family wishes to maintain a Singapore-based fund vehicle with a relatively moderate asset base.

Section 13U: The Enhanced-Tier Fund Tax Exemption Scheme

Section 13U (formerly Section 13X) is the premium-tier scheme, available to both onshore and offshore fund structures. It accommodates larger, more sophisticated structures — including master-feeder arrangements, limited partnerships, and Variable Capital Companies. It requires a higher minimum AUM and imposes more demanding staffing and local business spending requirements in return for greater structural flexibility.

Key Requirements Compared: Section 13O vs Section 13U

Investment Professional Requirements in Detail

One of the most significant practical requirements under both schemes is the Investment Professional (IP) criterion. An IP is an individual who:

• Is based in Singapore;
• Holds a valid Capital Markets Services (CMS) licence or is a representative of a CMS licence holder, or is an accredited investor performing investment analysis or fund management functions; and
• Spends at least 50% of their time on investment-related activities for the fund.

Critically, at least one IP must be a non-family member under both schemes. This was introduced to ensure that family offices employ genuine investment professionals rather than simply engaging family members as nominal staff.

Under Section 13U, the minimum is three IPs (vs two under Section 13O). For smaller family offices, meeting the IP requirement under 13U may require recruiting an additional external investment professional.

Local Business Spending (LBS) Requirements

Both schemes require the family office to incur a minimum level of qualifying local business expenditure each year. This is intended to ensure that family offices generate genuine economic activity in Singapore rather than simply booking passive income through a brass-plate structure.

Qualifying LBS includes management fees paid to Singapore-based fund managers, Singapore salaries of IPs and other qualifying staff, and other specified operating expenses incurred in Singapore. Certain expenses — including pass-through costs and investment management fees paid offshore — do not count towards the LBS threshold.

The tiered LBS structure for 2026 is as follows:

The MAS Investment Multiplier: Boosting Approved Investments

A significant enhancement to the 13O and 13U frameworks is the Philanthropy Tax Incentive Scheme for Family Offices and the MAS Investment Multiplier, which allows certain approved investments to count at up to 1.5× their face value towards the AUM threshold for LBS calculation purposes.

Approved investment categories attracting the multiplier include:

• Investments into Singapore-listed equities;
• Private equity investments into Singapore-based companies;
• Qualifying climate-related investments; and
• Blended finance structures approved by MAS.

For family offices with the flexibility to allocate capital into these categories, the multiplier can meaningfully reduce the effective LBS burden relative to total AUM.

Application Process: Getting MAS Approval

Both schemes require prior approval from MAS. The application process involves the following steps:

1. Incorporate the fund vehicle. For Section 13O, this must be a Singapore company or VCC. For Section 13U, a wider range of structures is permitted.
2. Engage a MAS-licensed fund manager. A single-family office structure typically involves setting up an exempt fund manager (EFM) under the Securities and Futures Act 2001, which allows the family office to manage its own funds without a full CMS licence if assets under management are below S$250 million.
3. Prepare the application package. MAS requires detailed information about the fund vehicle, the fund manager, the beneficial owners of the fund (including the family’s UBO structure), the investment strategy, and the proposed IP appointments.
4. Submit via MAS’s Family Office Application Portal.
5. MAS review. MAS typically takes three to six months to process an application, although processing times vary. Applicants should not make irreversible commitments (e.g., committing to multi-year IP employment contracts) until approval is received.

Note that MAS conducts annual reviews of approved family offices to verify ongoing compliance with the scheme’s conditions, including AUM, IP, and LBS requirements.

Which Scheme Is Right for Your Family Office?

The choice between 13O and 13U generally turns on four factors:

1. AUM and growth trajectory

If your investible assets are between S$20 million and S$50 million, Section 13O is the only option. If you have or expect to have assets above S$50 million, consider whether the additional LBS and IP requirements of Section 13U are worth the greater structural flexibility it offers.

2. Fund structure complexity

If your family office involves offshore entities, multiple fund vehicles, or a master-feeder structure, Section 13U is better suited as it accommodates non-Singapore fund vehicles and more complex arrangements.

3. Staffing capacity

Section 13U requires three IPs (at least one non-family), vs two under Section 13O. For smaller family offices, finding and retaining an additional external investment professional may represent a meaningful ongoing cost.

4. Philanthropic and Singapore-investment goals

If the family is inclined to make Singapore-listed equity or Singapore startup investments, the MAS Investment Multiplier makes these allocations strategically attractive for managing LBS obligations under either scheme.

Interaction with Immigration: The Global Investor Programme

Many high-net-worth families establish a family office in Singapore in conjunction with an application under the Global Investor Programme (GIP), which provides a pathway to Singapore Permanent Residency for qualifying investors. The GIP’s investment options include committing capital to a GIP-approved fund — which can overlap with a 13O or 13U-compliant family office structure. Careful coordination between the GIP application and the MAS family office approval is essential to avoid duplication of compliance burdens.

Conclusion

Section 13O and Section 13U are both powerful tools for tax-efficient family wealth management in Singapore. The right choice depends on your AUM, structure complexity, staffing capacity, and long-term investment goals. With the schemes extended to December 2029, Singapore remains a highly attractive and stable jurisdiction for family office establishment.

At Raffles Corporate Services, we assist high-net-worth families with the full spectrum of family office establishment services — from incorporating the fund vehicle and engaging the fund manager, to preparing MAS applications and managing ongoing corporate compliance. Contact us to discuss how we can help you establish your Singapore family office efficiently and compliantly.

— The Editorial Team, Raffles Corporate Services