Following the announcements made in the Singapore Budget 2024, the Monetary Authority of Singapore (MAS) released a circular on 1 October 2024, detailing the extension and revised conditions on Singapore’s fund tax incentive schemes under sections 13D (the Offshore Fund Tax Incentive Scheme), 13O (the Resident Fund Tax Incentive Scheme) and 13U (the Enhanced-tier Fund Tax Incentive Scheme) of the Income Tax Act 1947. The circular also detailed a new tax incentive scheme under Section 13OA of the ITA that applies to Singapore Limited Partnerships (LPs).  

The changes will take effect on 1 January 2025.  

Extension of fund tax incentive schemes

The expiry date of tax incentive schemes under Sections 13D, 13O and 13U has been extended until 31 December 2029. Additionally, the Goods and Services Tax (GST) remission and withholding tax (WHT) exemption on interest and other qualifying payments made to non-residents by incentivised funds will remain in effect and unchanged.  

Key highlights on the circular

The MAS notes in the circular that the revised measures aim to ensure that the incentive conditions are in line with the growth of Singapore’s asset and wealth management sector. The amendments mainly include improvements to ensure Singapore’s economic foundation for incentivised fund structures.  

Outlined below is the summary of the key changes to the Singapore fund tax incentive schemes:  

• Section 13O funds must meet a minimum asset under management (AUM) requirement of at least S$5 million in designated investments (DI) at the end of every financial year. At present, there is no minimum fund size. 
• Section 13U funds must maintain a minimum AUM of at least S$50 million in DI at the end of each financial year. At present, the minimum fund size requirement only applies at the time of application.  
• A fund’s AUM will be computed based on the value of investments held by the fund that qualifies as DI instead of the fund’s net asset value.  
• The local business spending (LBS) requirement applicable to Section 13O and Section 13U funds will range from S$200,000 for an AUM of less than S$250 million to S$500,000 for an AUM of S$2 billion or more.  
• Closed-end funds can make an irrevocable and voluntary election for “closed-end fund” treatment at the time of application for exemption under the Section 13O, 13OA or Section 13U scheme, providing greater tax certainty. 
• The 13D scheme will remain self-administered but will be required to be managed by a Singapore fund manager with at least one investment professional.  
• There will be no amendments to the conditions applicable to SFO funds as their economic commitments have been reviewed and revised in July 2023. 
• The DI list will be updated to clarify that real estate investment funds, in any form, are included in the DI list.  

Working with Bolder Group

The proposed changes to the fund tax incentive schemes are anticipated to make Singapore a more valuable investment management hub. These changes show Singapore’s commitment to staying competitive in the asset and wealth management market. In addition, managers managing existing funds from Singapore should also find value in the increased flexibility offered by the schemes. 

With a presence in significant jurisdictions such as Singapore, Bolder Group’s private wealth management stems from an in-depth understanding of our client’s personal and financial goals. We keep them informed on regulatory developments such as the fund tax incentive schemes and help them protect and manage their wealth and assets.  

Please contact our Singapore team for more information about these updates and our private wealth solutions.  

Bolder Group does not provide financial, tax or legal advice and the information contained herein is meant for general information purposes only. We strongly recommend that before acting on any of the information contained herein, readers should consult with their professional advisers. The Bolder Group accepts no liability for any errors or omissions in the information, or the consequences resulting from any action taken by a reader based on the information provided herein.

Bolder Group refers to the global network of independent subsidiaries of Bolder Group Holding BV. Bolder Group Holding BV provides no client services. Such services are provided solely by the independent companies within the Bolder Group which are each legally distinct and separate entities and have no authority (actual, apparent, implied or otherwise) to obligate or bind Bolder Group Holding BV in any manner whatsoever. The operations of the Bolder Group are conducted independently and have no affiliation with third party financial, tax or legal advisory firms or corporations.