Singapore Tax Implications of Funds managed by Singapore Fund Managers

Offshore or onshore funds managed by a Singapore fund manager will cause the gains/income of the funds to be taxable in Singapore even for offshore funds. However, specified income derived by these funds from designated investments [1] can be exempt from Singapore tax provided certain conditions are met under the tax incentive schemes below.

To qualify for the tax incentive schemes, the fund manager must be registered with the Monetary Authority of Singapore (MAS) or hold a Capital Markets Services (CMS) licence unless it is specifically exempted.

There are currently 3 tax incentive schemes [2] which apply to different funds (and their respective high level conditions):

The Offshore Fund Tax Exemption Scheme ("Section 13CA")

Applies to funds not resident and not incorporated in Singapore.
No minimum fund size and annual business spend required.
No MAS approval required.

The Onshore Fund Tax Exemption Scheme ("Section 13R")

Applies to funds tax resident and incorporated in Singapore.
No minimum fund size required but a minimum annual business spend is required.
MAS approval is required.

Investors of funds that qualify for Section 13CA and 13R exemptions are subject to certain restrictions - non-qualifying investors (i.e. Singapore non-individuals investing above a certain percentage in the fund) need to pay a financial penalty. However, no such restriction applies to funds that qualify for exemption under Section 13X:

The Enhanced Tier Fund Tax Exemption Scheme ("Section 13X")

Applies to onshore/offshore funds.
Minimum funds size required of S$50m.
Minimum annual local business spend is required.
Singapore fund manager must employ a minimum number of investment professionals.
MAS approval is required.

Mazars is an integrated partnership which has expertise in structuring new Singapore investments, advise on tax efficient holding company locations and group structures, funding mechanisms and fund structures, etc. We can also assist in obtaining the tax exemption in Singapore for the funds international clients would like to set up.

Do you have any questions for us?

[1] The list is widely defined but key exclusions include Singapore real properties and unlisted company shares which trade/hold such real properties other than for property development purposes.

[2] Currently available till 31 Dec 2024.