Fund Management -
Tax Incentive Scheme
3 Tax Incentive Schemes for Funds in Singapore - Helping Family Offices Better Manage Your Tax Reporting Matters
Singapore updates its Income Tax Act every 5 years, and the latest version is valid until December 31, 2024. To apply for the 3 types of fund tax incentive schemes mentioned above, two conditions must be met:
1
The fund manager needs to be registered with or hold a CMS license from the Monetary Authority of Singapore (MAS). A license exemption* can be obtained if the fund manager manages personal assets
Fund managers who apply for license exemption must comply with MAS's regulations
2
The family office must be a locally registered company in Singapore
Onshore Fund Tax Incentive Scheme – 13O
(formerly known as 13R)
SGD 20 million
Company structure requirements:
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Set up a fund to hold family assets (also known as "asset holding entity" or "fund entity")
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Set up a Family Office to operate and manage the fund (also known as "service entity" or "fund manager").
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Both business entities are legal entities registered in Singapore (registered with the Monetary Authority of Singapore or have a CMS license or have a clear exemption from the CMS license).
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The following conditions must be met:
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It needs to be approved by the Monetary Authority of Singapore and obtain a certificate of approval;
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Have a minimum fund size of at least 6 million Singapore dollars (about 30 million RMB) at the time of application (previous experience is above 8 million Singapore dollars or until approval)
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After being approved by the Monetary Authority of Singapore, there has been no change in investment strategy/objectives;
Each family office needs to hire at least one senior investor (with a monthly salary of not less than SGD 3,500). The fund manager does not need to live in Singapore for a long time, but needs to arrange 183 days in Singapore to prove that the fund manager has performed its investment responsibilities.
The annual business expenses incurred locally shall not be less than SGD 200,000 (approximately RMB 1 million, including fund management expenses);
Use Singapore-based fund managers;
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The fund legal person company cannot be directly or indirectly held by Singapore investors, nor can it be wholly held by Singapore investors as the ultimate beneficiary.
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Tax treatment:
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Tax deductions can be used for specific investment income generated by the fund manager-managed fund of the company approved by the Monetary Authority in Singapore.
Offshore Fund Tax Incentive Program-13D
Company structure requirements:
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Set up an offshore fund (can be registered in BVI or Cayman) to hold family assets.
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Set up a Family Office to manage the fund.
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The fund entity must be an offshore registered entity (it can be a company or a trust, but does not include a limited partnership).
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The fund manager should be a legal person company registered in Singapore (registered with the Monetary Authority of Singapore or possessing a CMS license or expressly exempting from a CMS license).
The following conditions need to be met:
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The fund has no permanent establishment or business in Singapore;
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Use Singapore-based fund managers;
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The fund legal person company cannot be directly or indirectly held by Singapore investors, nor can it be wholly held by Singapore investors as the ultimate beneficiary.
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The 13CA tax relief plan does not need to be approved by the Monetary Authority of Singapore, and there is no expense regulation, but it needs to be reviewed by the Singapore Inland Revenue Authority every year.
Tax treatment:
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Tax deductions can be used for specific individuals, specific investment income generated by funds managed by fund managers in Singapore.
Tax Incentive Scheme– 13U
Company structure requirements:
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Set up a fund to hold family assets. The fund entity can be an offshore fund or a Singaporean onshore fund.
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Set up a Family Office to operate and manage the fund.
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The fund manager should be a legal person company registered in Singapore (registered with the Monetary Authority of Singapore or have a CMS license or be explicitly exempted from the CMS license.
The following conditions must be met:
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Approved by the Monetary Authority of Singapore and obtain the approval certificate;
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Have a minimum fund size of 50 million Singapore dollars (about 250 million RMB) at the time of application;
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After obtaining the approval of the Singapore Monetary Authority, there is no change in the investment strategy/objective;
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The annual business expenses incurred locally shall not be less than SGD 200,000 (approximately RMB 1 million, including fund management expenses);
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If the fund entity is a legal entity registered in Singapore, use a fund manager based in Singapore;
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Each family office needs to hire at least 3 senior investors (each with a monthly salary of not less than SGD 3,500). The fund manager does not need to live in Singapore for a long time, but it needs to arrange 183 days in Singapore to prove that the fund manager has performed its investment responsibilities.
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There are no restrictions on investors who are Singapore tax residents, but they cannot enjoy other Singapore tax incentives at the same time.
Tax treatment:
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Tax relief can be used for specific investment income generated by the fund manager-managed fund of the person approved by the Monetary Authority in Singapore.
