Singapore Family Office Tax Schemes: Sections 13O and 13U
- Roger Pay
- 1 day ago
- 6 min read
Navigating Singapore’s Wealth Management Landscape: Sections 13O and 13U
Singapore Family Office Tax Schemes: Sections 13O and 13U
Singapore continues to solidify its status as the premier global hub for Family Offices. Central to this appeal are the Section 13O (Singapore Resident Fund Scheme) and Section 13U (Enhanced Tier Fund Scheme) tax incentive programs.
For Ultra-High-Net-Worth (UHNW) families, these sections are not just tax breaks—they are the structural bedrock for multi-generational wealth preservation.
Understanding the Basics: 13O vs. 13U
While both schemes provide tax exemptions on "specified income" from "designated investments" (such as stocks, shares, and bonds), they cater to different scales of operation.
Feature | Section 13O (Resident Fund) | Section 13U (Enhanced Tier) |
|---|---|---|
Minimum AUM | S$20 million at point of application | S$50 million at point of application |
Vehicle Type | Singapore-incorporated Company | Any (Company, Trust, LP) |
Local Spending | Tiered (S200ktoS500k+) | Tiered (S500ktoS1m+) |
Investment Professionals | At least 2 | At least 3 (1 must be non-family) |
MAS Approval | Required prior to launch | Required prior to launch |
Key Optimization Pillars for Family Offices
To maximize a successful, seamless application with the Monetary Authority of Singapore (MAS), consider these three pillars:
1. The "Specified Income" Advantage
The primary benefit is the exemption from Singapore corporate tax (currently 17%) on gains derived from most financial instruments. This includes:
Equities and Fixed Income
Derivatives and Structured Products
Foreign Exchange gains
2. Employment Passes (EP) and Residency
Applying for 13O or 13U allows family members or trusted professionals to apply for Employment Passes. This facilitates "skin in the game," ensuring the fund is managed by professionals physically present in Singapore, satisfying the "economic substance" requirements that global regulators now demand.
3. Strategic Philanthropy and ESG
Recent updates to the schemes encourage family offices to direct capital toward Climate-related investments and Singapore-based charities. Incorporating an ESG (Environmental, Social, and Governance) mandate doesn't just benefit the world; it aligns your fund with the MAS "Finance for Good" initiative, potentially streamlining the approval process.
The Application Roadmap
Structural Setup: Incorporate the Fund Vehicle and the Family Office (SFO).
AUM Deployment: Ensure the minimum Assets Under Management (AUM) are ready for transfer.
Professional Hiring: Recruit the required number of investment professionals.
MAS Submission: Submit a formal application detailing the investment strategy and five-year financial projections.
Note: The "Designated Investments" list is specific. Real estate in Singapore (excluding REITs) generally does not qualify for these tax exemptions.
Why Singapore?
Jurisdictions with transparency, legal certainty, and robust digital infrastructure are prioritized. Singapore’s 13O and 13U schemes are designed with these exact parameters in mind, making them the "gold standard" for families looking to future-proof their legacy against global tax volatility.
How Bestar Singapore can help
Singapore Family Office Tax Schemes: Sections 13O and 13U
In the competitive landscape of Singapore’s wealth management sector, Bestar Singapore acts as the strategic bridge between Ultra-High-Net-Worth (UHNW) families and the rigorous regulatory requirements of the Monetary Authority of Singapore (MAS).
To secure tax exemptions under Sections 13O and 13U, a successful application requires more than just capital—it requires a synchronized effort between professional tax advisors and MAS-licensed private bankers.
The Bestar-Private Banker Ecosystem
The partnership between Bestar and Tier-1 private banks is designed to streamline the two most critical hurdles for any Single Family Office (SFO):
Capital Deployment and Regulatory Substance.
1. The Gateway: Custody and Bank Account Opening
Under current MAS guidelines, an SFO must establish a private banking account with a licensed financial institution before the 13O or 13U application is submitted.
Bestar’s Role: We handle the rigorous KYC (Know Your Customer) and AML (Anti-Money Laundering) documentation required for onboarding.
The Banker’s Role: Private bankers facilitate the "Proof of Wealth" and provide the "Banker’s Reference Letter" essential for the MAS submission.
2. Meeting the Capital Deployment Requirement (CDR)
Since 2024, MAS has tightened the rules on where a family fund’s assets must be invested. At least 10% of AUM or S$10 million (whichever is lower) must be invested in local "Designated Investments" (DI).
Strategic Allocation: Bestar works with your private banker to identify qualifying assets such as:
Singapore-listed equities and REITs.
Qualifying Debt Securities (QDS).
Non-listed funds distributed by MAS-licensed financial institutions.
Optimization: We ensure these investments are tracked precisely for the annual tax return to the IRAS.
Why This Collaboration is Essential for 13O & 13U
The synergy between an accounting/tax firm like Bestar and a private banker ensures that the family office is viewed as a "Genuine Economic Entity" by the MAS.
Service Area | Bestar Singapore (Advisory) | Private Bankers (Financial) |
Licensing Exemption | Drafting the legal opinion for licensing exemption under the SFO framework. | Providing the investment platform to execute the mandate. |
Staffing (IPs) | Managing Employment Pass (EP) applications for Investment Professionals. | Verifying the professional credentials of the fund managers. |
Local Spending | Managing the S$200k+ Local Business Spending (LBS) audit. | Facilitating the payment of local service providers and salaries. |
Reporting | Preparing the annual MAS Declaration and tax computations. | Providing the year-end "Designated Investment" valuation reports. |
Professional Screening & The 2026 Landscape
As of late 2024, MAS mandates a Screening Report from authorized providers for all new SFO applications. Bestar coordinates this screening process, ensuring that the beneficial owners meet the "fit and proper" criteria. Simultaneously, your private banker ensures that the fund's liquidity matches the S$20M (13O) or S$50M (13U) threshold at the moment of filing.
Industry Insight: Private bankers provide the engine (the investment platform), while Bestar provides the navigation (tax and regulatory compliance). Without both, the vehicle risks a rejection or a protracted approval timeline.
Checklist of the Documents your Private Banker will need to provide to Bestar to begin the 13O/13U application
In 2026, the Monetary Authority of Singapore (MAS) has intensified its focus on "Economic Substance" and "Source of Wealth" verification. To ensure a successful Section 13O or 13U application, Bestar Singapore works in tandem with your private banker to compile a comprehensive Verification & Eligibility Dossier.
Below is the definitive checklist of documents and data points Bestar will require from your private banker.
Phase 1: Pre-Application & Account Onboarding
Before the tax incentive application can be filed, the private bank must finalize the "Know Your Customer" (KYC) process for the Fund and the SFO.
Banker’s Reference Letter: A formal letter from the MAS-licensed financial institution confirming the relationship with the Beneficial Owner (UBO).
Source of Wealth (SoW) Narrative: A detailed report, often co-drafted by the banker and Bestar, proving the legitimate origin of the family's assets (e.g., business sale, inheritance, or investment gains).
KYC Identification Pack: Notarized or digitally verified (via Singpass/MyInfo where applicable) copies of passports, proof of address, and corporate registers for all directors and UBOs.
Proof of Entity Funding: Initial bank statements showing the deposit of the minimum AUM (S$20M for 13O; S$50M for 13U).
Phase 2: The Tax Exemption Application (MAS Tax Portal)
Bestar uses these specific financial documents to build the case for your tax exemption.
AUM Valuation Statement: A certified statement as of the "Point of Application" confirming that assets are held in "Designated Investments" (DI).
Designated Investment (DI) Breakdown: A granular list of holdings.
Crucial for 2026: Bestar must verify that at least 10% or S$10M of the portfolio is allocated to local "Capital Deployment" categories (Singapore-listed equities, REITs, or Qualifying Debt Securities).
Product Factsheets: For non-listed funds or structured products, the banker must provide factsheets to prove they are "distributed by a licensed financial institution in Singapore."
Climate-Related Asset Verification: If your SFO is utilizing ESG assets to meet spending or deployment tiers, the bank must provide documentation (e.g., sale agreements or ESG ratings) labeling the investment as "Climate-Related."
Phase 3: Ongoing Annual Compliance (Post-Approval)
Once the exemption is granted, your banker provides the data Bestar needs for the Annual Declaration to the MAS and Tax Returns to the IRAS.
Year-End Portfolio Valuation: Used to prove the fund maintained its minimum AUM threshold throughout the financial year.
Realized Gain/Loss Reports: Bestar uses these to calculate "Specified Income" (exempt) vs. "Non-Specified Income" (taxable).
Local Business Spending (LBS) Evidence: Records of management fees paid from the Fund to the SFO, which count toward the S$200,000+ annual spending requirement.
Summary Checklist for Your Private Banker
Document Type | Purpose | Bestar's Action |
SoW Report | Regulatory KYC | Verify legitimacy for MAS Screening Report. |
AUM Statement | Eligibility | Confirm S$20M/S$50M threshold is met. |
DI Asset List | Tax Optimization | Map assets to the "Designated Investment" list. |
Fee Schedules | LBS Requirement | Ensure SFO management fees meet spending tiers. |
Would you like Bestar to initiate a joint introductory call with your private banker to begin the documentation audit for your 13O or 13U application?
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