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

Singapore has become one of the world’s leading destinations for single family offices (SFOs), and the country’s fund tax incentive framework — anchored by Sections 13O and 13U of the Income Tax Act 1947 — is a central reason why. Both schemes exempt qualifying investment income from Singapore income tax, but they differ in meaningful ways that affect which one a given family should apply for.

This guide compares Section 13O and Section 13U side by side, explains the 2026 updates to the regime, and helps you determine which incentive is the right fit for your family office.

Overview: What Both Schemes Share

Sections 13O and 13U are administered by the Monetary Authority of Singapore (MAS). Both schemes:

• Exempt “specified income” derived from “designated investments” from Singapore income tax for an approved fund
• Require the fund to be managed by a Singapore-based family office entity (the investment manager)
• Impose minimum assets under management (AUM), local hiring, and local business spending (LBS) requirements
• Are separate from the new MAS notification-based SFO exemption (effective 15 June 2026), which governs whether the family office entity must be licensed under the Securities and Futures Act

The designated investments covered by both schemes are broad and include listed and unlisted equities, bonds, derivatives, units in collective investment schemes, real estate (via approved structures), commodities, foreign exchange, and qualifying private equity and venture capital exposure.

Section 13O: The Resident Fund Scheme

Section 13O (previously known as the Section 13R Onshore Fund Tax Incentive Scheme until a 2023 renaming) is designed for Singapore-incorporated and Singapore-resident funds.

Key Requirements (as at 2026)

Key Characteristics

• Onshore fund vehicle only — the fund entity must be a Singapore company. Foreign fund vehicles (e.g. Cayman limited partnerships) cannot apply for 13O.
• Non-family investment professional — MAS requires at least one of the two minimum IPs to be a non-family member, reflecting a desire for genuine professional investment governance rather than a token compliance appointment.
• Lower AUM threshold — the S$10 million minimum AUM makes 13O accessible for families starting their family office journey with a relatively modest initial quantum.
• Singapore residency of key personnel — at least one IP must be tax resident in Singapore.

Section 13U: The Enhanced Tier Fund Scheme

Section 13U (previously Section 13X) is the enhanced tier of the fund tax incentive framework, designed for larger family offices with more complex structures or cross-border requirements.

Key Requirements (as at 2026)

Key Characteristics

• Structure-agnostic — 13U can apply to fund vehicles incorporated in any jurisdiction, including the Cayman Islands and BVI. This is the primary differentiator for families who wish to maintain a Cayman fund as the investment vehicle with a Singapore SFO as the manager.
• Higher AUM threshold — the S$50 million minimum reflects the enhanced nature of the scheme and MAS’s intent to attract genuinely substantial pools of wealth.
• Three investment professionals required — the additional IP requirement means greater headcount and associated employment costs in Singapore.
• More flexibility for complex structures — multi-fund families, co-investment vehicles, and cross-border structures are better served by 13U’s structural flexibility.

Section 13O vs 13U: Side-by-Side Comparison

Which Scheme Is Right for Your Family?

The choice between 13O and 13U is driven principally by AUM size and desired fund structure:

• Below S$50 million AUM — Section 13O is the only option available under the current framework. A Singapore Pte Ltd as both the fund vehicle and the family office manager is the standard structure.
• Between S$50 million and approximately S$70–80 million AUM — either scheme is technically available. Section 13O is often preferred at this size because the operating cost difference between two and three IPs is material, and the Singapore-company fund vehicle structure is entirely workable. The flexibility of 13U begins to matter more as the portfolio grows and cross-border complexity increases.
• Above S$100 million AUM — Section 13U is typically the preferred choice. The additional IP and the S$50 million AUM threshold are less significant relative to the total operating costs of a larger family office, and the structural flexibility (particularly the ability to use a Cayman fund vehicle managed by a Singapore SFO) becomes genuinely useful.
• Families applying under the Global Investor Programme (GIP) Option C — GIP Option C requires the family office to be established in Singapore. The GIP family office must then apply for MAS tax incentive approval; 13O or 13U is selected based on AUM and structural preference. See our Global Investor Programme guide for more detail.

The 2026 MAS Notification-Based SFO Exemption: What It Adds

Effective 15 June 2026, MAS introduced a new notification-based class exemption under the Securities and Futures Act for qualifying single family offices. This is separate from the 13O/13U tax incentive — it governs whether the SFO entity requires a fund management licence.

Under the new framework, a Singapore-incorporated private company wholly owned and funded by members of a single family (within 5 generations) can operate as an SFO without a full fund management licence, provided it:

1. Files a notification with MAS within 14 days of commencing operations
2. Maintains an account with a MAS-licensed bank
3. Files an annual return with AUM and bank details

Families setting up new family offices after 15 June 2026 should structure their SFO to satisfy both the notification-based exemption requirements and either 13O or 13U from the outset. Existing SFOs must file the notification with MAS by 15 June 2027. For a complete guide to the family office setup process, see our Singapore family office setup guide.

The Application Process

Both 13O and 13U applications are submitted to MAS. The process typically involves:

1. Engaging a Singapore corporate services firm and legal counsel to structure the family office and prepare the application
2. Incorporating the fund vehicle (and, if separate, the SFO management entity)
3. Preparing the application package: investment strategy, AUM evidence, IP details, LBS projections, projected business activities
4. Submitting to MAS and responding to any queries
5. Receiving in-principle approval (IPA), which must be converted to a confirmed award within a specified period

Processing timelines vary but typically run 3–6 months from submission of a complete application. For investment considerations beyond the family office itself, sound financial planning and investment decisions matter equally to long-term wealth management goals.

For the latest Singapore investment news and family office updates, there are useful resources for high net worth families and their advisers.

Conclusion

Section 13O and Section 13U offer complementary pathways to tax-efficient investment management from Singapore. Section 13O is the accessible entry point for families with S$10–50 million in investable assets who are comfortable with a Singapore fund vehicle. Section 13U opens up structural flexibility and is better suited to larger families with offshore fund vehicles or more complex multi-asset mandates.

In 2026, the new MAS notification-based SFO exemption adds a further dimension to the regulatory landscape that new family offices must navigate. Proper upfront structuring — coordinating the MAS licensing exemption, the 13O/13U application, and the corporate structure — will save significant time and cost down the road.

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