Further to our Article on “Singapore Tax Implications of Funds managed by Singapore Fund Managers”, the Monetary Authority of Singapore (“MAS”) has recently updated the conditions for the tax incentives for certain funds managed by family offices. The stricter conditions apply to the Resident Fund Scheme under Section 13O (formerly known as Section 13R) and the Enhanced Tier Fund Scheme under Section 13U (formerly known as Section 13X) applicable to funds managed by family offices.
Current applications will not be subject to the updated conditions if (i) the applicants submitted preliminary information before 18 April 2022 and have had correspondence with the MAS in the last six months, or (ii) they submitted a formal application to the MAS via MASNET before 18 April 2022.
In addition to existing conditions, the new conditions listed below now apply to funds managed or advised directly by a family office which:
(i) is an exempt fund management company (“FMC”) who manages assets for or on behalf of the family(ies)1; and
(ii) is wholly owned or controlled by members of the same family(ies).
The following are the updated conditions:
| Section 13O (formerly known as Section 13R) | Section 13U (formerly known as Section 13X) |
Assets under management (AUM) | A minimum fund size of S$10 million is required and committing to increase it to S$20 million within a 2-year grace period | A minimum fund size of S$50 million is required |
Business spending [subject to the tiered business spending framework^] | Minimum annual total business spending of S$200,000 is required | Minimum annual local business spending of S$500,000 is required |
Investment Professionals (“IPs”)2 | Singapore fund manager must employ a minimum number of investment professionals | At least one investment professional must be a non-family member with a one year grace period allowed |
Local investment | Minimum local investment is required |
Tiered business spending framework
AUM range | Minimum total business spending S13O | Minimum local business spending S13U |
AUM < S$50 million | S$200,000 | S$500,000 |
S$50 million ≤ AUM < S$100 million | S$500,000 |
AUM ≥ S$100 million | S$1 million |
How can we help
At Mazars, we have the expertise in structuring new investments managed and advised by family offices, and we can assist you in identifying the right tax incentives for your funds.
Contact us today to learn more about the new conditions to Section 13O and Section 13U and how the changes will impact the family offices sector in Singapore.
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[1] “Family” refers to individuals who are lineal descendants from a single ancestor, as well as the spouses, ex-spouses, adopted children and stepchildren of these individuals.
[2]: Singapore tax resident portfolio managers, research analysts or traders.