Section 13O and 13U in plain terms

Sections 13O and 13U of the Income Tax Act 1947 provide tax exemption on specified income from designated investments, for fund vehicles managed by Singapore-based fund managers — including family offices. Both are awarded by the Monetary Authority of Singapore on application, and both carry conditions that must be met throughout the incentive period, not just at the point of award.

The entry thresholds differ by design. Under 13O (and its sister scheme 13OA), the fund must hold at least S$20 million in designated investments and employ at least two qualifying investment professionals, of whom at least one is not a family member. Under 13U — the enhanced-tier scheme, with no requirement that the fund vehicle be incorporated in Singapore — the figures rise to S$50 million in designated investments and three qualifying investment professionals, again with at least one non-family member. Qualifying investment professionals must be Singapore tax residents, employed as portfolio managers, research analysts or traders earning more than S$3,500 a month and spending more than half their time on the qualifying activity.

Both schemes then attach a tiered local spending requirement and a capital deployment requirement. Local spending starts at S$200,000 a year for funds below S$250 million in designated investments, rising to S$500,000 and then S$1 million at the largest tier, with eligible donations and grants to blended finance instruments able to count toward the higher tiers. The capital deployment requirement obliges the fund to invest the lower of 10% of assets or S$10 million into Singapore-linked investments — approved-exchange listings, products distributed by MAS-licensed institutions, or non-listed Singapore operating companies — with a 2x multiplier for categories MAS most wants to encourage.

The direction of travel is clear: the schemes are no longer passive exemptions but active bargains — tax relief in exchange for professionals on the ground, money spent locally, and capital deployed into the Singapore market. Thresholds and conditions are updated by MAS circular from time to time, so advisers should always confirm requirements against the current circular at the point of application.