In brief
On 31 July 2026, the Monetary Authority of Singapore (MAS) issued a circular on the tax incentive schemes for funds available under S13D, S13O, S13OA, and S13U of the Income Tax Act 1947 of Singapore (ITA) ("Circular"). The Circular refines the changes introduced by the MAS on 1 October 2024, with certain changes taking effect from 1 August 2026 and others applying retroactively from 1 January 2025.
The Circular covers updates affecting non-single family office (non-SFO) funds, single family office (SFO) funds, and changes and clarifications relevant to funds covered under the tax incentive schemes generally.
Key takeaways
The Circular covers the following matters:
| Category |
Key Point |
| Non-SFO funds |
|
| SFO funds |
|
| Definition of Specified Income (SI) from Designated Investments (DI) |
|
In more detail
1. Changes applicable to non-SFO funds
a. Removal of the requirement to maintain a minimum AUM in DI
The requirement to maintain an annual minimum AUM in DI for S13O/OA/U non-SFO funds has been removed with retroactive effect from 1 January 2025.
The minimum AUM in DI requirement at the point of application continues to apply to non-SFO funds under S13O/OA (SGD 5 million in AUM in DI) and S13U (SGD 50 million in AUM in DI).
b. Third-party capital requirement
Non-SFO funds admitted into the S13O/OA/U tax incentive schemes are required to have capital contributed by third-party investor(s), or a bona fide intention to raise capital from third-party investors. The MAS reserves the right to revoke the award if the fund relies on such intention but does not subsequently provide evidence of raising capital from third-party investor(s). Third-party investors refer to investors who are not related parties of the fund management company (FMC).
2. Changes applicable to SFO funds
a. Relaxation of the number of IPs required at the point of application
| S13O/OA SFO funds |
S13U SFO funds |
|
|
b. Simplifying reporting requirements for minimum AUM in DI
To reduce the compliance burden associated with continuous tracking of AUM in DI, an S13O/OA/U SFO fund is only required to report that it meets the minimum AUM in DI threshold at the point of application and at the end of each basis period.
c. Relaxation of tiered minimum local spending requirement
Previously, the tiered minimum local spending requirement required funds with higher AUM in DI to incur higher levels of local business spending. For example, a fund with more than SGD 100 million of AUM in DI was required to incur at least SGD 1 million of local business spending annually. This requirement has now been relaxed as follows, and would apply to existing awards which were subject to the tiered minimum local spending requirement:
| AUM in DI as at the end of the basis period (SGD) |
Minium local spending for the basis period (SGD) |
| AUM in DI < 250 million |
200,000 |
| 250 million ≤ AUM in DI < 2 billion |
500,000 |
| AUM in DI ≥ 2 billion |
1,000,000 |
d. Changes to CDR
SFO funds must deploy at least the lower of (i) 10% of its AUM in DI, or (ii) SGD 10 million, in specified investments (which have been streamlined into three options), as follows:
- Option 1: DI listed on Approved Exchanges
- Option 2: DI distributed by MAS-licensed financial institutions in Singapore, excluding equities listed outside Approved Exchanges
- Option 3: DI which are non-listed Singapore-incorporated companies with operating business(es) and with substantive presence in Singapore.
The following investments received enhanced recognition and are counted at twice their value (i.e., with a 2x multiplier applied) when computing whether CDR is met:
- Equities listed on Approved Exchanges
- Funds investing substantially in Singapore-listed equities
- Blended finance instruments distributed be licensed financial institutions in Singapore
- Investments in non-listed Singapore-incorporated companies with operating business(es) and with substantive presence in Singapore.
e. Private banking account requirement
SFO funds must also comply with any existing private banking account condition in their letter of award. SFO funds not previously subject to this requirement will be granted a 3‑month grace period from 1 August 2026 to obtain the private banking account, failing which the award may be revoked.
3. Changes applicable to both non-SFO and SFO funds
Updates to SI and DI list and related clarifications
To allow funds increased flexibility in portfolio diversification and to support greater capital deployment into physical IPMs in Singapore, the 5% cap on investments in physical IPMs has been removed from 1 August 2026. The MAS reserves the right to deny the tax exemption or revoke the award of a non-bona fide IPM fund set up by retailers and manufacturers solely to shield profits from tax.
Tokenised interests in an existing DI may qualify as DI if they confer the same interests, rights and obligations as direct ownership of the underlying DI.
What should clients do?
The simplification and relaxation of reporting requirements for AUM in DI is welcome. The relaxation of the number of IPs required at the point of application for SFO funds will also give new applicants a longer runway to set up their family office.
For existing funds, the implications of the Circular will depend on the type of fund, the applicable tax incentive scheme, the commencement date of the award, and the specific conditions set out in the fund's letter of award. Fund vehicles, SFOs, FMCs, and administrators should review and recalibrate ongoing reporting and compliances processes, including assessing whether current practices (such as existing CDRs, where applicable) remain aligned with the revised requirements. Funds subject to special award conditions should also seek advice on how the changes affect their existing awards.
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We hope this information has been helpful. We would like to remind you that the information set out in this client alert does not constitute legal advice nor should it be regarded as a substitute for detailed advice in individual cases.
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