On 31 July 2026, the Monetary Authority of Singapore (“MAS”) issued Circular FDD Cir 05/2026 (“the 2026 Circular”) setting out changes and updates to the fund tax incentive schemes under Section 13D (“S13D”), Section 13O (“S13O”), Section 13OA (“S13OA”) and Section 13U (“S13U”) of the Singapore Income Tax Act 1947 for non-single family office (“Non-SFO”) funds; i.e. funds typically managed by a licensed fund management company (“FMC”) in Singapore. Although the Circular was issued on 31 July 2026, certain updates announced took effect retrospectively from 1 January 2025.

Taking into consideration industry feedback with a view to easing compliance, the 2026 Circular refined some of the changes previously announced by MAS on 1  October 2024 that took effect from 1 January 2025. It also introduces transitional measures to allow funds to gradually transition to the updated requirements. The newly introduced entry condition for S13O and S13OA funds also comes with a grace period to help such funds to adjust to the additional requirement.  

Two key highlights of the changes announced

 

Key changes announced

Assets Under Management in Designated Investments (“AUM in DI”) 

 

  • A new requirement for S13O and S13OA incentive awards commencing on or after 1 January 2025 to have minimum AUM in DI of S$5 million at the point of incentive application (the “entry condition”).  
  • The requirement for S13O and S13OA funds to maintain minimum AUM in DI of S$5 million and for S13U funds to maintain minimum AUM in DI of S$50 million at the end of each financial year (“FY”) has been retroactively removed from 1 January 2025.   

Investments in IPMs

 

  • The 5% cap on investments in physical investment precious metals (“IPMs”) was removed with effect from 1 August 2026.

 

Key economic conditions for S13O, S13OA and S13U schemes updated with retroactive effect from 1 January 2025

Economic conditions 

S13O and S13OA funds

S13U funds

AUM in DI 

 

  • S13O and S13OA funds with   incentive award commencing on or after 1 January 2025 must have minimum AUM in DI of S$5 million at the point of incentive application (the “entry condition”).  
    Grace period: If needed, the fund is allowed to meet this new entry condition by the end of the basis period of the third Year of Assessment (“YA”) of the award. If the condition is not met by then, the incentive award will be revoked from its commencement date.  
  • No requirement to maintain minimum AUM in DI at end of each FY in subsequent years of assessment to qualify for tax exemption provided that the entry condition mentioned above is  met.
     
  • The fund must have minimum AUM in DI of S$50 million at the point of incentive application.
  • No requirement to maintain minimum AUM in DI at end of each FY from 1 January 2025 to qualify for tax exemption. 
     
[Prior to 2026 MAS announcement: No minimum AUM in DI entry condition. Funds were instead required to maintain minimum AUM in DI of S$5 million at the end of each FY from 1 January 2025.][Prior to 2026 MAS announcement: Funds were required to maintain minimum AUM in DI of S$50 million at the end of each FY from 1 January 2025.]

Investment Professionals (“IPs”)

 

The fund must be managed directly by an FMC in Singapore throughout the year.

FMC must employ at least two qualifying IPs with relevant experience. They must be tax residents in Singapore, each earning more than S$3,500 per month and substantially engaged in qualifying fund management activity throughout each year.

Transitional measure:

FMC is required to employ at least two qualifying IPs throughout each basis period with effect from YA 2028. 
   

The fund must be managed directly by an FMC in Singapore throughout the year.

FMC must employ at least three qualifying IPs with relevant experience. They must be tax residents in Singapore, each earning more than S$3,500 per month and substantially engaged in qualifying fund management activity throughout each year.  

Business Spending Condition

 

The fund must meet the minimum local business spending (“LBS”) condition determined based on its AUM in DI as set out in the table below in each basis period relating to any YA. 

AUM in DI as at the end of FY

 

Minimum LBS for 
the basis period
S$

AUM in DI < S$250 million

200,000

S$250 million ≤ AUM in DI < S$2 billion

300,000

AUM in DI ≥ S$2 billion

500,000

Transitional measure:

The fund is only required to meet: 

  • the minimum total business spending condition of S$200,000 (for S13O and S13OA funds) and the minimum LBS condition of S$200,000 (for S13U funds with awards commencing prior to 1 January 2025) in each basis period relating to years of assessment prior to YA 2028; and 
  • the tiered minimum LBS condition in each basis period with effect from YA 2028.

 

Updates to Designated Investments list - Investments in IPMs and other clarifications

Prior to 1 August 2026, investments in physical IPMs qualified as DI provided they did not exceed 5% of the fund’s total investment portfolio. The imposition of the 5% cap constrained fund managers   from allocating a larger portion of the portfolios they managed to physical gold. This 5% cap was removed with effect from 1 August 2026.

The removal of the 5% cap provides fund managers with greater flexibility in portfolio diversification. It also supports a suite of initiatives aimed at positioning Singapore as a trusted node in the global gold ecosystem, including the introduction by MAS of central bank gold vaulting services, the Singapore Exchange’s establishment of an over-the-counter gold clearing system for Loco Singapore and the development of gold-related capital markets products.

While the updated DI list primarily reflects the removal of the 5% cap on investments in IPMs, MAS also provided further clarifications on the scope of DI and specified income (“SI”). These clarifications are relevant in assessing how certain income streams and newer investment arrangements may be treated under the fund tax incentive schemes.

  • Tokenised interests in existing DI may also qualify as DI, provided the tokenised interest confer the same interests, rights and obligations as direct ownership of the underlying DI.  
  • Foreign-sourced income derived from DI will qualify as SI when remitted to Singapore only if both the derivation and remittance occur during the incentive period. Income derived outside the incentive period, or remitted after the incentive period, will not qualify as SI.
  • Guarantee fees derived in respect of a DI may qualify as SI where the fund is primarily established for investment purposes and is not being used to facilitate the treasury activities of operating companies. For example, where a fund receives guarantee fees from using or lending securities that are DI as collateral to support another entity’s debt financing or borrowing activities, such income may be regarded as SI if it is derived as part of the fund’s investing activities.

 

“Closed-end fund” treatment for non-SFO S13O, S13OA and S13U funds

Closed-end funds typically have fixed lifespans and designated fundraising and redemption periods. In the latter part of the funds’ life, their AUM in DI and LBS may decrease as investments are divested and capital is returned to investors. For a 10-year lifespan fund, divestments may commence soon after the fifth year.   

All funds are required to continue to comply each year with the relevant economic conditions of the incentive scheme that they were granted, notwithstanding that the divestment process has   commenced. The requirement to maintain a minimum amount of AUM in DI at the end of each FY for S13O, S13OA and S13U funds is no longer an issue as this condition has been removed effective from 1 January 2025. However the requirement to meet the LBS condition remains.

Closed-end funds may not be able to meet the business spending condition if they face decreasing LBS during the divestment years.  To address this issue, such funds may voluntarily opt into the “closed-end fund” treatment.  Under this arrangement, the annual LBS condition is to be met on a cumulative basis for the entire time period that the fund is on the incentive scheme, or ten years, whichever is the earlier, after which the requirement to meet the LBS condition is waived. If the cumulative LBS requirement has not been met by the 10th incentive year, the fund will be required to make good the shortfall in the following year. Only when the cumulative requirement is fully satisfied, the LBS condition will then be waived for subsequent years.

Any fund with an existing incentive award, commencing on or after 1 January 2025, may elect for the “closed-end fund” treatment. The election once made is irrevocable. The process would entail the revocation of the fund’s existing award and an application for a new award.  

With the adoption of this option, the closed-end fund is required to have its incentive award revoked with effect from the end of its divestment phase, or the day immediately after its 20th incentive year, whichever is the earlier.    

 

Other previously announced changes which remain relevant

Apart from the July 2026 updates to the key economic conditions, fund managers should also keep in mind several earlier changes to the tax incentive schemes which emphasise on economic substance, local fund management activity and ongoing compliance with MAS requirements.

Issue

Previously announced changes 

S13D scheme

 

  • SFO and non-SFO S13D funds must be managed directly throughout the year by an FMC in Singapore, who is required to employ at least one qualifying IP, to demonstrate a minimum level of economic substance in Singapore, from YA 2028.  
  • The 30/50 rule will no longer apply to investors of S13D funds that are S13D trusts or unit trusts with effect from YA 2025.

S13O and S13OA schemes

 

  • The condition that an S13O or S13OA fund must be a newly set- up company has been removed with effect from 1 January 2025. This means that a fund that was previously carrying on a business in Singapore and already has investments may apply for the S13O or S13OA scheme.
  • The 30/50 rule will no longer apply to investors of S13O and S13OA funds, which are trusts or unit trusts incentivised under the S13D scheme with effect from YA 2025.

S13U scheme

 

  • With effect from 1 January 2025, the additional minimum AUM in DI and local business spending requirements no longer apply in respect of a special purpose vehicle or trading feeder fund included in an S13U fund structure.

Changes in the funds’ investment strategy 

 

  • With effect from 1 January 2025, S13O, S13OA and S13U funds no longer need to seek MAS approval for changes in their investment strategy. However, funds should continue to update MAS on any such changes for its records.

Determination of AUM

 

  • For the purposes of the tax incentive schemes, AUM should be determined by reference to the value of the fund’s investments that qualify as Designated Investments.

 

Key takeaways

The July 2026 updates are targeted refinements to the tax incentive schemes, taking into consideration industry practices and feedback. The announced changes modernise the fund tax incentive framework, ease compliance and provide transitional measures to allow funds to gradually transition to the updated requirements.

The removal of the 5% cap in investments in physical IPMs allows greater flexibility in portfolio diversification and supports the development of gold-related services and capital markets products in Singapore. Collectively, these modifications enhance Singapore’s competitiveness as a fund management hub while aligning the tax incentive regime with evolving market practices.

Fund managers should review their existing and proposed fund structures against the updated economic conditions, particularly the AUM entry threshold, qualifying investment professional requirement and the meeting of the tiered local business spending obligations to ensure continued eligibility for the relevant tax incentive schemes.

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MAS Updates on Tax Incentive Schemes for Non-Single Family Office Funds

MAS Updates on Tax Incentive Schemes for Non-Single Family Office Funds

Get in touch with one of our specialists to discuss these latest changes and the previously announced changes that remain relevant and assess their potential impact on the funds you currently manage.

Koh Puay Hoon
Partner & Head of Tax Advisory
+65 6594 7820
KohPuayHoon@RSMSingapore.sg 

Law Wei Lin
Partner, International Tax
+65 6715 1164
LawWeiLin@rsmsingapore.sg

Soh Jin Feng
Director, International Tax
+65 6715 1161
SohJinFeng@RSMSingapore.sg

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