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

Singapore’s Family Office Tax Incentive Landscape

Singapore has become one of Asia’s leading family office destinations, attracting ultra-high-net-worth families from across the region and beyond. A key pillar of Singapore’s appeal is its tax incentive framework for family office structures — specifically Section 13O and Section 13U of the Income Tax Act, which provide tax exemption on investment income earned by qualifying funds managed by single family offices (SFOs).

Both schemes offer a 0% tax rate on specified income from designated investments — no capital gains tax, no dividend withholding tax from designated investments, and no income tax on qualifying fund returns. However, the two schemes differ significantly in their qualifying thresholds, operational requirements, and flexibility. This guide compares Section 13O and Section 13U in detail to help high-net-worth families and their advisers choose the right structure.

What Are Section 13O and Section 13U?

Both Section 13O and Section 13U are tax exemption schemes administered by the Monetary Authority of Singapore (MAS) and the Inland Revenue Authority of Singapore (IRAS). They are the primary vehicles through which Singapore single family offices structure their investment activities to achieve tax-efficient returns.

• Section 13O (formerly known as the Onshore Fund Tax Incentive or OFI scheme): For smaller family offices managing S$20 million or more in Designated Investments.
• Section 13U (formerly known as the Enhanced-Tier Fund Tax Incentive or ETFI scheme): For larger family offices managing S$50 million or more in Designated Investments, with greater fund residency flexibility.

Both schemes were extended to 31 December 2029 — ensuring continued availability for family offices being set up or renewing their applications over the next several years.

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

Section 13O: Best for Families with S$20M–S$50M AUM

Section 13O is the natural choice for families whose Designated Investments fall between S$20 million and S$50 million — below the S$50 million threshold required for Section 13U. It is also suitable for larger families who prefer the simplicity of a Singapore-resident fund structure and can meet the fund residency requirement without difficulty.

Key Requirements under Section 13O

Minimum AUM: The fund must have at least S$20 million in Designated Investments at the time of application and must maintain this level at the end of each basis period (typically the financial year end). AUM is now measured only against Designated Investments (DI) — not total assets — following the 1 January 2025 update to the MAS guidelines.

Fund residency: The fund vehicle must be a Singapore tax-resident company. This is typically a Singapore incorporated company (Pte Ltd) that acts as the investment holding vehicle. This is generally straightforward for families who wish to base their primary family office vehicle in Singapore.

Investment professionals: At least one investment professional (IP) must be based in Singapore. An IP is defined as a full-time employee of the fund manager who spends the majority of their time conducting investment management activities. Family members who are genuinely employed as investment professionals can satisfy this requirement, though their qualifications and activities will be scrutinised by MAS.

Local business spending: Like Section 13U, Section 13O requires annual local business spending (LBS) on Singapore-based services to stimulate the local economy. The LBS is tiered based on the fund’s AUM in Designated Investments:

• AUM less than S$250 million: S$200,000 per year
• AUM S$250 million to S$2 billion: S$300,000 per year
• AUM above S$2 billion: S$500,000 per year

Eligible LBS categories include investment management fees, legal fees, accounting fees, auditing fees, fund administration fees, and other professional services provided by Singapore-based firms.

Capital deployment: The fund must deploy a minimum of 10% of its AUM (or S$10 million, whichever is lower) in qualifying Singapore investments annually. Qualifying investments include Singapore-listed equities, Singapore-incorporated company bonds, Singapore private credit, and Singapore real estate investment trusts (S-REITs), among others.

Section 13U: Best for Larger Family Offices Wanting Flexibility

Section 13U is better suited for families with S$50 million or more in Designated Investments, particularly where the family wishes flexibility over the fund vehicle’s residency (for example, using an offshore fund structure such as a Cayman Islands or BVI vehicle) while still benefiting from Singapore’s tax exemption.

Key Requirements under Section 13U

Minimum AUM: S$50 million in Designated Investments — both at application and at the end of each basis period. For families between S$50 million and approximately S$70 million, the additional operational requirements of Section 13U (see below) may make Section 13O more cost-effective despite the lower AUM ceiling being applicable.

Fund residency flexibility: Unlike Section 13O, Section 13U does not require the fund to be a Singapore tax-resident company. This allows families using offshore fund structures (such as Cayman Islands Limited Partnerships, BVI companies, or similar) to qualify for the Singapore tax exemption without incorporating a Singapore fund vehicle. This is particularly relevant for multi-fund family structures or those with pre-existing offshore investment vehicles.

Investment professionals: Section 13U requires at least 3 investment professionals based in Singapore, of whom at least 1 must be a non-family member. This higher staffing threshold reflects the scheme’s intention to attract larger, more institutionalised family offices that create meaningful employment and expertise in Singapore.

Local business spending and capital deployment: These requirements are the same as Section 13O (same tiered LBS structure; 10%/S$10M Singapore investment deployment).

The Variable Capital Company (VCC) as a Fund Vehicle

Both Section 13O and Section 13U are compatible with the Singapore Variable Capital Company (VCC) structure, which has become increasingly popular among family offices for its sub-fund flexibility. A VCC allows a family to hold multiple investment mandates (e.g. private equity, listed equities, impact investing) under a single umbrella structure with independent sub-funds.

For a detailed comparison of Singapore fund structures including the VCC, see our guide on VCC vs Cayman SPC: Why Singapore Is the New Fund Domicile. For a comprehensive overview of setting up a family office in Singapore, including the GIP residency pathway, refer to our Complete Guide to Setting Up a Family Office in Singapore (2026).

Choosing Between Section 13O and Section 13U: Decision Framework

The right choice depends on the family’s specific circumstances. As a general guide:

• AUM below S$50 million: Section 13O is the only option. Section 13U’s S$50 million minimum threshold is absolute.
• AUM between S$50 million and S$70 million: Section 13O is often more cost-effective. The additional cost of employing 3 IPs (including 1 non-family member) under Section 13U may not justify the fund residency flexibility for families of this size.
• AUM above S$70 million–S$100 million: Section 13U becomes increasingly attractive, particularly for families with existing offshore fund structures or a desire to eventually migrate to a more institutionalised investment management framework.
• AUM above S$200 million: Section 13U is typically the preferred structure due to the fund residency flexibility, the ability to manage offshore investment mandates within the same exemption framework, and the greater institutional credibility of a scheme with higher staffing and AUM requirements.

For the latest Singapore investment and family office updates, there are useful resources for families navigating the 13O and 13U application process. Families exploring property investment in Bangkok as part of a diversified multi-asset family portfolio may also find the Section 13U structure’s offshore fund flexibility particularly relevant.

Application Process and MAS Approval

Both Section 13O and Section 13U require an application to MAS. The key steps are:

1. Incorporate the fund vehicle (or identify the existing offshore vehicle for 13U)
2. Set up the Singapore family office entity (the fund manager)
3. Appoint investment professionals in Singapore
4. Apply to MAS for the tax incentive, attaching evidence of AUM, IP credentials, and the family’s investment mandate
5. Obtain a letter of approval from MAS and coordinate with IRAS for the tax exemption treatment

The typical MAS approval timeline is 3 to 6 months from a complete application. Where the family is also applying for the Global Investor Programme (GIP) for Singapore permanent residency, the family office setup timeline should be aligned with the GIP application — see our Global Investor Programme guide for details.

For legal advice on the Section 13O or 13U application process, we can point you in the right direction. If you are weighing the cost of a single family office vs a multi-family office, our comparison guide covers the cost and operational implications in detail.

Conclusion

Section 13O and Section 13U are Singapore’s two primary tax exemption schemes for single family offices, offering a 0% tax rate on qualifying investment income. Section 13O suits smaller family offices with S$20 million or more in Designated Investments and requires a Singapore-resident fund vehicle. Section 13U suits larger family offices with S$50 million or more, offering greater fund residency flexibility in exchange for higher staffing requirements. Choosing between the two schemes depends primarily on AUM size, fund structure preferences, and the family’s long-term investment management model.

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 about family office setup, VCC structuring, or the 13O/13U application process.

— The Editorial Team, Raffles Corporate Services