For families looking at Singapore as the long-term jurisdiction for managing private wealth, the choice between the Singapore Family Office Tax Incentives under Section 13O and Section 13U of the Income Tax Act 1947 is the single most consequential structural decision in the setup. The two schemes share much of the same architecture — investment professional headcount, capital deployment, local business spending — but diverge sharply on minimum assets under management, fund residency, and operational footprint. In 2026, with the Monetary Authority of Singapore (MAS) having extended both schemes to 31 December 2029 and tightened the qualifying conditions, the choice is no longer cosmetic.
This guide compares the two schemes head-to-head as at May 2026: AUM thresholds, IP requirements, the tiered Local Business Spending (LBS) framework, the Singapore capital deployment rule, and the residency distinction that drives the headline difference between the two routes. We also flag the operating realities — the Employment Pass profile of investment professionals, the work-pass interaction for family-member directors, and the secretarial overhead — that determine whether the structure functions in practice or only on paper.
For families weighing the move, our recommended approach is to model both schemes against the household’s actual AUM, planned Singapore deployment, and tolerance for ongoing operating expense — and only then commit to either Section 13O or Section 13U. The wrong choice locks in higher operating cost or, worse, exposes the structure to disqualification later when MAS reviews compliance with the standing conditions.
What are the Singapore Family Office Tax Incentives in 2026?
Per the MAS family office tax-incentive scheme, Sections 13O and 13U of the Income Tax Act 1947 grant tax exemption on specified income from designated investments for fund vehicles — including the increasingly popular Variable Capital Company (VCC) structure — managed by Singapore-based fund managers, including single family offices. The exempt income covers interest, dividends, gains on disposal of designated investments, and most categories of fund-level investment return. Income outside the designated-investments list — for example, certain Singapore real-estate income — falls outside the exemption.
The two schemes serve the same policy goal — anchoring family-office activity in Singapore — but they target different fund sizes and different residency preferences. Section 13O is the entry-tier scheme for Singapore-tax-resident funds; Section 13U sits a tier higher and accommodates non-Singapore-resident fund vehicles. Both are administered by MAS in coordination with the Inland Revenue Authority of Singapore (IRAS) and require an application that is reviewed against MAS’s substance-and-deployment criteria.
Section 13O 13U comparison: the AUM and residency split
The two parameters that drive the choice between Section 13O and Section 13U are minimum assets under management and fund residency. Everything else in the schemes — IPs, LBS, capital deployment — is largely aligned.
Section 13O: the SGD 20 million Singapore-resident track
Under Section 13O, the fund vehicle must hold a minimum AUM of SGD 20 million at the point of application — there is no grace period for ramping up to that level. The fund must be incorporated in Singapore and resident here for tax purposes; the family-office entity managing the fund must also be a Singapore-incorporated company. This is the path most commonly used by mid-AUM family wealth structures, including those just beginning to migrate from offshore to Singapore.
Section 13U: the SGD 50 million flexible-residency track
Under Section 13U, the minimum AUM is SGD 50 million at the point of application. The fund vehicle, however, can be constituted and maintained either in Singapore or outside of it — providing flexibility for families with pre-existing offshore structures (for example, a Cayman segregated portfolio company) that they prefer to retain rather than collapse and re-establish in Singapore. The fund manager itself must still be Singapore-licensed or registered.
From May 2026, MAS mandates that the applicable minimum AUM be retained for the entire life of the fund. This is the tightening that catches some families off-guard: a structure that drops below the threshold mid-year — for example, after a large distribution — risks losing tax-exempt status. Designing the household drawdown plan around the AUM floor is therefore a first-order structuring decision.
13O 13U scheme requirements: investment professionals
Both schemes require at least two investment professionals (IPs) at the family-office entity, of whom at least one must be a non-family member. A one-year grace period applies if the family office has only one IP at the point of application — the second must be hired within 12 months. Failure to meet the headcount within the grace window jeopardises the exemption.
An IP, in MAS’s definition, is a portfolio manager, research analyst, or trader who is paid more than SGD 3,500 per month and spends more than 50% of working time on qualifying investment activity. In practice, IPs are routinely hired on Employment Passes given the qualifying-salary profile sits well above the EP threshold of SGD 5,600 (or SGD 6,200 for Financial Services). Our complete Singapore Employment Pass guide 2026 covers the EP qualifying-salary tiers and COMPASS scoring that IP candidates need to clear.
The non-family-member rule is a substance test. MAS does not want family offices that comprise only the principal and their immediate relatives — the policy is to encourage genuine investment-management activity in Singapore, which in turn requires at least one professional outside the family. Some families approach this by hiring a senior portfolio manager from a private bank or a wealth-management boutique; others rotate seasoned external advisors in as employed IPs.
Singapore family office tax exemption: the tiered Local Business Spending rule
The Local Business Spending requirement scales with fund AUM. The 2026 framework is tiered as follows.
| Fund AUM | Minimum annual LBS |
|---|---|
| Below SGD 50 million | SGD 200,000 |
| SGD 50 million to SGD 100 million | SGD 500,000 |
| Above SGD 100 million | SGD 1,000,000 |
LBS captures business expenses paid to Singapore-based service providers. Eligible categories include local salaries (including those of family-office staff), Singapore-based legal, audit, tax, fund administration and corporate-secretarial fees, MAS licensing fees, office rent in Singapore, and IT spend on Singapore providers. Expenses incurred with offshore providers are not counted. For families running a tightly-scoped family-office entity, the LBS floor — particularly at the SGD 1 million tier — can be the binding operating-cost driver.
13O vs 13U Singapore: capital deployment
Both schemes require a minimum allocation of fund assets to Singapore-based investments — at least 10% of the fund’s AUM or SGD 10 million, whichever is lower, deployed at any one time. The deployment must be maintained continuously, including throughout the application process. Eligible Singapore-based investments include Singapore-listed equities and funds, Singapore-incorporated unlisted businesses, Singapore-issued bonds (including Singapore Government Securities), and qualifying private credit positions.
From the 2025 refresh, MAS recognises a multiplier on certain qualifying investment categories — for example, a 1.5x or 2x recognition factor on private equity into Singapore start-ups, climate-related investments, and selected listed equity allocations — which can ease the deployment maths for families that allocate predominantly to such categories. The technical detail is in MAS’s published infographics; we treat the multiplier as an opportunity rather than a planning baseline.
Section 13O vs Section 13U at a glance
The summary comparison below captures the headline parameters as at May 2026.
| Parameter | Section 13O | Section 13U |
|---|---|---|
| Minimum AUM at application | SGD 20 million | SGD 50 million |
| Fund residency | Singapore-resident only | Singapore or offshore |
| Investment professionals | 2 (1 non-family); 1-year grace | 2 (1 non-family); 1-year grace |
| Local Business Spending | SGD 200K / 500K / 1M tiered | SGD 200K / 500K / 1M tiered |
| Singapore capital deployment | Min 10% AUM or SGD 10M | Min 10% AUM or SGD 10M |
| Scheme validity | Until 31 December 2029 | Until 31 December 2029 |
The implication is that the threshold question — is the family’s AUM closer to SGD 20 million or SGD 50 million? — drives almost the entire choice. Below SGD 50 million, Section 13O is effectively the only option. Between SGD 50 million and around SGD 70 million, Section 13O remains attractive because the operating overhead is identical and the Singapore-residency requirement is acceptable. Above that, the residency flexibility of Section 13U starts to matter.
Operational considerations for families and fund managers
Tax exemption is only the visible tip of the family-office structuring decision. The operational considerations are where many setups stumble.
Investment professional pass strategy. Both IPs will require Employment Passes if they are foreign hires. Family principals serving as IPs may also need EPs, depending on residency status. For non-family IPs, the EP qualifying-salary floor is comfortably below typical IP packages, but COMPASS scoring (especially C5 diversity) needs careful pre-check. Families with a heavily concentrated nationality mix should consider rotating in at least one IP from a different nationality to avoid C5 failure. Our COMPASS framework guide sets out the points mechanics.
PEP and ONE Pass for principals. Family principals who are not active in day-to-day investment management may use the Personalised Employment Pass or the ONE Pass instead of a regular EP — the latter is particularly suitable for principals with track records of senior leadership at a SGD 30,000+ monthly salary level. Our family office hiring guide 2026 sets out the senior-role pass strategy.
Incorporation and ongoing secretarial. Both the family-office entity (a Singapore-incorporated private limited company) and a Singapore-resident 13O fund vehicle (typically a VCC sub-fund or a Singapore-incorporated corporate fund) need to be incorporated, licensed where applicable, and maintained with full ACRA, IRAS, and MAS compliance. Where the structure is layered with a 13U non-Singapore fund, additional cross-jurisdictional secretarial discipline is required. Raffles Corporate Services handles the incorporation, ACRA filings, and ongoing corporate-secretarial workstream as a single retainer for family-office structures.
PR and citizenship pathway. The MAS Global Investor Programme remains the dedicated PR-by-investment route for principals committing capital at scale, and the family-office track requires at least SGD 200 million in net investible assets. For families who do not meet that threshold, the Family Ties Scheme and the Professional, Technical and Skilled Worker (PTS) scheme remain accessible after 24 months on an Employment Pass. Our complete Singapore PR pathway guide 2026 walks the criteria.
Conclusion: pick the scheme that fits the household, not the headline
The choice between Section 13O and Section 13U is rarely about tax savings in isolation — both schemes deliver the same exempt-income outcome. The decision is about AUM headroom, residency preference, operating-cost tolerance, and the family’s appetite for concentrating fund vehicles in Singapore. For most mid-tier family wealth (SGD 20 million to SGD 50 million), Section 13O is the natural fit. For families with established offshore structures and AUM comfortably above SGD 50 million, Section 13U preserves residency optionality.
What matters more than the scheme choice is the discipline of running the structure. The 2026 MAS conditions reward families that build genuine investment-management substance in Singapore — two real IPs, real Local Business Spending, real Singapore capital deployment — and penalise paper structures with strict ongoing review.
For families planning a Singapore family-office setup or weighing the 13O versus 13U decision against their actual AUM and operating preferences, our team at Singapore Employment Agency handles the work-pass strategy for principals and IPs. For the corporate setup — incorporation, fund-vehicle structuring, ongoing ACRA and MAS compliance — we coordinate with Raffles Corporate Services to deliver the complete family-office programme under one roof.
— The Editorial Team, Little Big Employment Agency