Singapore continues to strengthen its position as a global hub for family offices as a major economy in Southeast Asia. Recent updates to its tax incentives demonstrate a shift towards transparency, philanthropic impact, and local investment. As the Monetary Authority of Singapore (MAS) introduced new regulations in 2023, single family offices in Singapore now need to adhere to more rigorous standards under the major tax exemptions in the country. These include the Enhanced Tier Tax Incentive Scheme (13U), Offshore Fund Exemption Scheme (13D), and Onshore Fund Incentive Scheme (13O).
In this edition, we have explored the eligibility requirements in-depth, along with the evolving role of family offices within the financial landscape in Singapore.
Overview of Key Tax Incentives for Family Offices in Singapore
| Tax Incentive | Tax Incentive | Key Requirements | Minimum Assets Under Management (AUM) |
| 13D Offshore Fund Exemption Scheme | Non-Singapore residents managed by a Singapore-based fund manager | Non-resident in Singapore – No full ownership by Singaporean entities | No minimum AUM required |
| 13O Onshore Fund Incentive Scheme | Companies incorporated in Singapore | 100% Singapore investors – S$200,000 minimum annual spending – Employ at least two investment professionals (IPs) | S$20 million |
| 13U Enhanced Tier Tax Incentive Scheme | Offshore and onshore entities | Open to foreign investors – S$500,000 minimum annual spending – Employ at least three IPs | S$50 million |
Detailed Evaluation of Tax Schemes For Single Family Offices in Singapore
Now, let’s take a look at the detailed breakdown of tax schemes for single family offices in Singapore.
Offshore Fund Exemption Scheme (13D)
Under the 13D scheme, funds managed by Singapore-based managers on income derived from certain investments are subjected to certain tax exceptions. The eligibility for this exception depends on the non-resident status of the fund in Singapore and a structure prohibiting full ownership by Singaporean entities. However, this scheme doesn’t have any AUM or minimum local spending requirements. It is crucial for compliance and effective tax planning.
Onshore Fund Incentive Scheme (13O)
The 13O scheme encourages the establishment of fund vehicles within Singapore. It targets companies that are locally incorporated. The requirements of this scheme are as follows.
- Investors must be entirely from Singapore
- The minimum AUM should be $20 million
- To strengthen local economic contributions, the minimum annual spending should be S$200,000
- Professional staffing requirements involve two qualified investment professionals with a monthly income of at least S$3,500
Thus, MAS remains committed to foster local talent and developing various sectors.
Investment Allocation
Coming to investment allocation, at least 10% of AUM or S$10 million must be allocated to climate-related investments, local equities, or non-listed funds that are distributed by financial entities licensed in Singapore. Thus, the financial ecosystem will benefit from local investments, including non-listed Singapore companies with a notable presence.
Enhanced Tier Tax Incentive Scheme (13U)
The 13U is the most comprehensive scheme and applies to both onshore and offshore entities. Key components of this scheme are:
- Jurisdiction: Flexible residency requirements
- AUM: Minimum S$50 million to qualify
- Annual local spending: At least S$500,000 to promote consistent reinvestment within Singapore
- Professional staffing: There should be three investment professionals that support an advanced level of fund management and compliance oversight
In recent years the role of single family offices in Singapore in wealth management for affluent families has gained unprecedented prominence. Thus, it’s imperative to maximize tax incentives through this scheme. It allows family offices to use the tax treaties in Singapore and is applicable to Variable Capital Companies (VCCs).
Local Philanthropy and Contributions to ESG
The Philanthropy Tax Incentive Scheme of Singapore, designed in 2023, has been effective from January 2024. It provides incentives to family offices that allocate funds towards local and global philanthropic causes. This scheme includes a provision of up to 100% tax deduction, which is capped at 40% of the income of the donor.
With this scheme, Singapore demonstrates its strategic goal to allocate capital toward important social causes. The funds donated to charities in Singapore also qualify as business expenses under the regulations of MAS. Thus, philanthropy has been embedded as a component of compliance in Singapore.
Maximize Tax Incentives with Professional Consultation Services from Experts
The tax schemes in Singapore offer a clear pathway for single family offices to achieve tax efficiency while they support local economic and social initiatives. Established advisory professionals like the IMC Group work closely with single family offices in Singapore to help affluent families manage their wealth and maximize their tax savings through incentives. With expert assistance, single family offices can optimize the tax structure amidst the dynamic regulatory environment in Singapore.
