Singapore’s two flagship family office tax incentive schemes — Section 13O and Section 13U of the Income Tax Act — are the cornerstone of the city-state’s family office ecosystem. Both provide an exemption from Singapore income tax on specified investment income generated through a fund, but they differ materially in their asset threshold, expenditure requirements, staffing obligations, and fund structure flexibility.
Understanding which scheme is appropriate requires careful analysis of your family’s AUM, investment strategy, staffing capacity, and long-term objectives. This guide provides a direct comparison of the two schemes as they stand in 2026, following the Ministry of Finance’s 2023 enhancements and MAS‘s updated Single Family Office notification framework effective 15 June 2026.
Overview: What Are 13O and 13U?
Both Section 13O (formerly known as Section 13R) and Section 13U (formerly known as Section 13X) are tax exemption schemes under the Income Tax Act (Cap. 134) of Singapore. They exempt a fund managed by a Singapore-based Family Office (SFO) or fund management company from Singapore income tax on “specified income” arising from “designated investments.”
Specified income includes dividends, interest, gains from disposal of investments, and certain other investment returns. Designated investments cover a wide range of asset classes, including equities, bonds, derivatives, commodities, currency, real estate (directly or through funds), private equity, and certain digital assets.
Section 13O: The Enhanced Tier Fund Tax Exemption
Section 13O is designed for family offices with a minimum of S$20 million in assets under management (AUM). Key requirements include:
AUM Threshold
The fund must have a minimum AUM of S$20 million at the point of application, and maintain this throughout the incentive period.
Fund Structure
The fund must be incorporated or constituted in Singapore — typically a Singapore private limited company, a Variable Capital Company (VCC), or a Singapore-constituted trust. Offshore fund structures (Cayman Islands, BVI, Luxembourg) do not qualify for 13O. This makes 13O the natural starting point for families who want a fully Singapore-based structure. For a comparison of the VCC against offshore alternatives, see our guide on setting up a VCC sub-fund in Singapore.
Local Expenditure Requirement
The fund must incur at least S$200,000 in local business spending per year. This typically comprises management fees paid to the Singapore-incorporated family office entity, salaries of Singapore-based staff, professional fees paid to Singapore advisers, and related operational costs.
Local Investment Requirement
At least 10% of the fund’s AUM, or S$10 million, whichever is lower, must be invested in local assets. “Local investments” include Singapore-listed equities and bonds, Singapore real estate investment trusts (REITs), direct investments in Singapore companies, loans to Singapore businesses, and qualifying Singapore-focused funds.
Investment Professionals
The fund must be managed by at least 2 investment professionals based in Singapore, at least 1 of whom must not be a family member. “Investment professional” is defined by MAS as a person who contributes to the investment decision-making process and has at least 5 years of relevant investment experience.
Section 13U: The Ultra-Tier Fund Tax Exemption
Section 13U is designed for larger family offices, typically those with AUM of S$50 million or more. It offers greater flexibility in fund structure in exchange for higher threshold requirements.
AUM Threshold
The fund must have a minimum AUM of S$50 million at the point of application.
Fund Structure Flexibility
Unlike 13O, Section 13U permits the fund to be constituted or incorporated in Singapore or outside Singapore. This means an existing Cayman Islands or BVI fund vehicle can potentially qualify for 13U, which is a significant advantage for families with established offshore structures who do not wish to restructure.
Local Expenditure Requirement
The fund must incur at least S$500,000 in local business spending per year — significantly higher than the 13O threshold and reflecting the larger scale of the operation.
Local Investment Requirement
The same formula applies: at least 10% of AUM or S$10 million, whichever is lower in local investments.
Investment Professionals
The fund must be managed by at least 3 investment professionals based in Singapore, at least 1 of whom must not be a family member. The higher headcount requirement reflects the expectation that a 13U family office is a more substantial and professionalised operation.
Side-by-Side Comparison
| Criterion | Section 13O | Section 13U |
|---|---|---|
| Minimum AUM | S$20 million | S$50 million |
| Fund incorporation | Must be Singapore | Singapore or offshore |
| Annual local spending | At least S$200,000 | At least S$500,000 |
| Local investment requirement | 10% of AUM or S$10M (lower of) | 10% of AUM or S$10M (lower of) |
| Investment professionals | At least 2 (1 non-family) | At least 3 (1 non-family) |
| Suitable for | Families building a Singapore-based structure from scratch | Larger families; existing offshore structures |
MAS Single Family Office Notification Framework (Effective 15 June 2026)
On 15 June 2026, MAS replaced individual no-action letters for Singapore SFOs with a statutory class exemption. Under the new framework, family offices operating as SFOs (managing assets exclusively for a single family) must file a Notification with MAS within 14 days of commencing operations. Existing SFOs have until 15 June 2027 to file the Notification and satisfy the conditions. The class exemption does not affect 13O or 13U eligibility, but SFOs must ensure their MAS notification and incentive documentation are aligned.
The Application Process
Applications for both 13O and 13U are made jointly to the Economic Development Board (EDB) and MAS. The typical process involves:
- Incorporating the fund vehicle and the family office manager in Singapore
- Opening custody accounts with MAS-licensed banks in Singapore
- Hiring qualifying investment professionals
- Preparing the incentive application with financial projections, investment strategy, and family structure documentation
- Submitting to EDB/MAS and responding to queries
- Receiving approval, typically within 3 to 6 months
Which Scheme Is Right for Your Family?
The choice between 13O and 13U is driven primarily by AUM and fund structure. Families with AUM between S$20 million and S$50 million who are starting fresh in Singapore typically begin with 13O. Families with AUM above S$50 million, or those with existing offshore fund vehicles they wish to retain, generally choose 13U.
Both schemes require ongoing compliance — annual filing of audited accounts, maintaining local investment levels, meeting expenditure thresholds, and retaining qualifying staff. The compliance burden is meaningful, and families considering these schemes should ensure they have professional support to manage them over the long term.
For the broader context of Singapore investment and financial news, family offices can find useful commentary on regulatory and market developments. Beyond tax structuring, broader investment planning and portfolio management decisions are equally important for families seeking to preserve and grow wealth across generations.
If you need legal advice on setting up or restructuring a Singapore family office, engaging experienced Singapore counsel early is critical given the complexity of the regulatory and tax landscape.
To speak with the team at Raffles Corporate Services, you can email [email protected] or call, SMS, or WhatsApp +65 8501 7133. We are happy to assist with any queries.
— The Editorial Team, Raffles Corporate Services
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