If you are setting up a family office in Singapore, the tax incentive you pick determines the shape of your entire structure — AUM commitment, staffing, business spending, and reporting cadence all flex around it. In 2026, the two dominant regimes remain Section 13O (Onshore Fund Tax Exemption Scheme) and Section 13U (Enhanced-Tier Fund Tax Exemption Scheme). This guide compares them side-by-side and helps you decide which is right for your family.
Both schemes exempt qualifying fund income from Singapore tax, but the eligibility bars and ongoing conditions are very different. Get the choice wrong and you either overspend on infrastructure or fail conditions and lose the incentive.
The 30-Second Snapshot
Section 13O is a smaller-scale onshore incentive typically used by single-family offices with S$20 million or more in assets under management (AUM). It requires a Singapore-based fund, a Singapore-based fund manager, and modest local business spending.
Section 13U is the enhanced-tier equivalent for larger structures — S$50 million or more in AUM, employing at least three investment professionals, with meaningful business spending. It is used by multi-family offices, quasi-institutional structures, and larger single-family offices.
Section 13O: The Small-Cap Path
Statutory Basis
Section 13O of the Income Tax Act 1947, administered by the Monetary Authority of Singapore (MAS) and IRAS. See Singapore Statutes Online for the underlying provision.
Key Conditions (2026)
- Minimum AUM: S$20 million at the point of application, maintained throughout the incentive period
- Fund structure: Singapore-incorporated fund vehicle
- Fund manager: Singapore-based, holding a Capital Markets Services (CMS) licence or exempt status
- Local business spending: S$200,000 per year in Singapore (management fees, staff costs, professional fees, office rent)
- Investment professionals: Minimum 2, each earning at least S$3,500 per month
- Diversification: No single investment can exceed 20% of AUM concentration limit
What Income Is Exempt
Specified income from designated investments — largely investment gains and returns from equity, debt, funds, derivatives, and certain other financial instruments. Trading gains for a passive fund are typically exempt; active trading may not be.
Section 13U: The Enhanced-Tier Path
Key Conditions (2026)
- Minimum AUM: S$50 million at application and maintained throughout
- Investment professionals: Minimum 3 based in Singapore, each earning at least S$3,500 per month; the additional headcount must include at least one senior IP earning at least S$8,000/month
- Local business spending: Tiered by AUM — S$500,000/year for funds with AUM under S$50m committed; S$1 million/year for AUM ≥ S$50m; S$1.5 million/year for AUM ≥ S$100m
- Diversification and capital deployment: Similar 20% concentration cap, plus a Singapore-based capital deployment requirement (10% or S$10m, whichever is lower, into local investments like SGX-listed equities, MAS-approved bond issuances, or private Singapore SMEs)
The Local Capital Deployment Wrinkle
The Singapore-capital deployment requirement was added to steer family office capital into local markets. It matters because family offices that arrive with a pure private-equity or global-equity strategy need to carve out a domestic allocation — even a modest S$5 million SGX bond ladder can satisfy the rule.
Side-by-Side Comparison
| Feature | Section 13O | Section 13U |
|---|---|---|
| Minimum AUM | S$20 million | S$50 million |
| Fund location | Singapore | Anywhere (typically Singapore) |
| Fund manager | Singapore CMS-licensed or exempt | Singapore CMS-licensed or exempt |
| Minimum IPs | 2 | 3 (senior IP required) |
| Annual local spending | S$200,000 | S$500,000 – S$1.5 million tiered |
| Local capital deployment | Not required | 10% or S$10m (lower) |
| Application to MAS | Required | Required |
| Ongoing reporting | Annual | Annual |
| Typical scale | Small single-family office | Large single-family or multi-family |
Which One Fits Your Family?
Pick Section 13O If…
- Total investable wealth is S$20 – S$70 million
- The family principal is content with a lean team (principal + 1 IP + admin)
- You want the lowest cost of Singapore infrastructure
- You are new to Singapore and want to prove the model before scaling
Pick Section 13U If…
- AUM is at least S$50 million and likely to grow
- The family is building a professional in-house investment team (portfolio managers, analysts)
- You plan to include third-party family funds (multi-family)
- You want to be part of Singapore’s institutional community and access MAS engagement, industry councils
Common Missteps
Choosing 13O when AUM is trending up. Families with rapidly compounding wealth or expected liquidity events often start on 13O and rush to migrate. Migration to 13U mid-year can trigger complications; see our 13O → 13U transition mechanics guide.
Underspending on local business. Both schemes require documented local spending. Booking management fees to an offshore entity doesn’t count — the payer must be the Singapore fund and the payee must be a Singapore-taxed entity.
Concentration breaches. The 20% cap is measured at deployment. Buying a single blue-chip stake that becomes 25% of AUM through appreciation doesn’t automatically breach — but new capital added on top might.
IP salary mismatches. The IP requirement is a substance test. A part-time or nominal IP won’t satisfy MAS. Salary must be commercially reasonable for the role and evidenced through CPF payslips.
The Application Timeline
Both schemes require a formal application to MAS. Realistic timing:
- Pre-work (structuring, entity setup, MOU with fund manager): 2 – 3 months
- Application preparation and submission: 4 – 6 weeks
- MAS review and clarifications: 4 – 6 months
- Approval and effective date: aligned with fund launch date
Total realistic runway: 8 – 12 months from decision to operating fund. See our Family office MAS approval timelines.
Ongoing Compliance — Not Set and Forget
After approval, both schemes require:
- Annual audited financial statements of the fund
- Annual declarations to MAS on AUM, IPs, business spending, and (for 13U) local capital deployment
- Ongoing CMS licence obligations for the fund manager, including annual returns, capital adequacy, and business conduct reporting
- IRAS filings for the fund and manager separately
Miss a condition — say, IP drops below 2 for 13O — and the incentive can be revoked, sometimes retroactively for that year of assessment.
Structural Additions to Consider
A single-family office running on Section 13O often adds:
- A holding company for operating businesses (separate from the fund)
- A private trust company for succession planning — see PTC setup
- A ONE Pass for the principal (removes employer-tied constraints)
Multi-family offices moving to 13U often add: a licensed fund management company, third-party auditors familiar with MAS reporting, and a governance charter separating family from professional investment decisions.
Sunset Clauses to Watch
Both incentives have historically been extended. The current schemes are legislated with sunset dates that Parliament typically renews. Family offices should not treat the incentive as permanent; they should treat it as a 5–10 year window during which the family can build durable Singapore substance that will still make Singapore attractive even if the incentive framework shifts.
Getting Started
Family office setup in Singapore is a coordinated project spanning entity incorporation, MAS incentive application, licensing, banking onboarding, work pass sponsorship, and tax residency. Sequencing matters — mis-order the steps and the effective date of the incentive can slip by months.
Read next: SFO Setup Timeline, Section 13O Full Lifecycle, Section 13U Full Lifecycle, and EP vs ONE Pass vs PEP for principal work visas.
— The Editorial Team, Raffles Corporate Services