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Section 13R and Section 13X of Income Tax Act

Updated: Mar 9

Singapore tax exposure of funds managed by Singapore fund managers


Funds managed by a Singapore fund manager may be taxed in Singapore due to the fund manager’s activities managing the investment of the fund. Fund managers may establish taxable funds in Singapore (whether onshore or offshore), therefore, certain income and gains generated by the fund may be deemed to come from Singapore and may be liable to tax in Singapore. However, according to Singapore’s tax incentive scheme, this tax liability can be exempted, provided that the relevant conditions are met.


Main features and conditions of Singapore tax incentive scheme


Funds managed by fund managers in Singapore can adopt Section 13R and Section 13X tax exemption schemes, among which "specified income" (including gains) derived by the fund from "designated investments" is exempt from tax. All funds that meet any of the following tax exemption scheme can enjoy tax exemption during the duration of the fund, but the premise is that the fund must continue to meet relevant conditions for each scheme.


The following summarizes the main features and conditions of Singapore’s tax incentive scheme.


Onshore (Singapore Resident Company) Fund Tax Exemption Scheme (Section 13R of the SITA)


Scheme exemption: Specified Income from Designated Investments is tax-exempt


The designated investment list covers a wide range of investments, including stocks, shares, bonds, securities and derivatives. The key exclusion is real estate in Singapore (and the shares of non-listed companies that buy, sell or hold such real estate other than for real estate development purposes).


Fund’s legal form: Company incorporated in Singapore


Fund’s residence: Must be tax resident of Singapore


Singapore Variable Capital Company (VCC) eligible: Yes


From the perspective of fund tax exemption, VCC will receive a single 13R exemption and will cover all sub-funds of the subsidiary. However, the assets and liabilities of each sub-fund will be legally separated from those of other sub-funds. For more details, see here.


Fund manager: Based in Singapore and hold CMS licence, or expressly exempt from holding CMS license.


Investors: Non-qualifying investors (i.e., Singapore non-individuals investment higher than a certain percentage in the funds) will need to pay financial penalty to the Singapore tax authorities.


Assets under management (AUM): No restrictions


Fund expenditure: Expenses of at least S$200,000 in a financial year


Fund administrator: Based in Singapore


Approval requirement: Must be approved by MAS. No change in investment strategy allowed after approval.


Other tax features: Enjoy Singapore Double Tax Treaty Network


Reporting requirement: Annual statement to investors. Tax return filing to IRAS for Non-Qualifying investors.


Income tax filing: Annual tax return to IRAS


Annual declarations to MAS: Required


Section 13R. Exemption of income of company incorporated and resident in Singapore arising from funds managed by fund manager in Singapore


Subject to conditions as may be prescribed by regulations or specified in the letter of approval of the company, there shall be exempt from tax such income of a company incorporated and resident in Singapore and approved (referred to as an approved company) arising from funds managed —


(a) in Singapore by a fund manager; or


(b) by an approved person.


Enhanced Tier Fund Tax Exemption Scheme (Section 13X of the SITA)


Scheme exemption - Specified Income from Designated Investments is tax-exempt


The designated investment list covers a wide range of investments, including stocks, shares, bonds, securities and derivatives. The key exclusion is real estate in Singapore (and the shares of non-listed companies that buy, sell or hold such real estate other than for real estate development purposes).


Fund’s legal form - Various forms of funds


Besides companies, trusts and limited partnerships, all eligible fund vehicles will be eligible to qualify for the Section 13X scheme.


Fund’s residence - No restrictions


Singapore Variable Capital Company (VCC) eligible - Yes (for Singapore VCCs – Singapore incorporated or redomiciled into Singapore)


From the perspective of fund tax exemption, VCC will receive a single 13X exemption and will cover all sub-funds of the subsidiary. However, the assets and liabilities of each sub-fund will be legally separated from those of other sub-funds. For more details, see here.


Fund manager - Based in Singapore and hold CMS licence, or expressly exempt from holding CMS license. In addition, the Section 13X fund must be directly managed or advised by a Singapore fund manager that employs at least 3 investment professionals. VCC fund managers must be regulated and cannot be exempt from holding a CMS licence.


Investors - No restrictions


Assets under management (AUM) - Minimum S$50 million at the point of application (committed capital concession available for real estate, infrastructure, private equity, debt and credit funds).


Fund expenditure - At least S$200,000 local business spending in a year


Fund administrator - Based in Singapore if the fund is a company incorporated and resident in Singapore


Approval requirement - Must be approved by MAS. No change in investment strategy allowed after approval.


Other tax features - May have a chance to enter Singapore Double Tax Treaty Network (e.g., where the fund is Singapore tax resident legal entity). Cannot enjoy other tax incentives at the same time. This scheme is suitable for Master-Feeder structure, subject to conditions that may need to be satisfied on an aggregate basis.


This includes the structure of investing through special purpose vehicle(s) under the Master-Feeder-SPV or Master-SPV structure. Extension of Section 13X scheme to accommodate various forms of fund are only applicable to:

-Master funds and feeder fund(s) of the master-feeder fund structure; and

-Master-feeder fund-SPV structure feeder fund(s).


Reporting requirement - Not required


Income tax filing - Annual tax returns to IRAS


Annual declarations to MAS - Required



Section 13X. Exemption of income arising from funds managed by fund manager in Singapore


Subject to such conditions as may be prescribed by regulations or specified in the letter of approval of the person, master fund, feeder fund, SPV, master‑feeder fund structure, master‑feeder fund‑SPV structure or master fund‑SPV structure, there shall be exempt from tax such income of —


(a) an approved person arising from funds managed in Singapore by a fund manager;


(b) in relation to an approved master-feeder fund structure —


(i) a person (not being an individual, a body of persons or a Hindu joint family) that is an approved master fund or an approved feeder fund of the structure;


(ii) a partner of a partnership (including a limited partnership and a limited liability partnership), where the partnership is the approved master fund or an approved feeder fund of the structure;


(iii) a trustee of a trust fund where the trust fund is the approved master fund or an approved feeder fund of the structure; and


(iv) a taxable entity in relation to the approved master fund or an approved feeder fund of the structure, where the master fund or feeder fund is not a legal entity,


arising from funds of the master fund or any feeder fund of that structure, that are managed in Singapore by a fund manager;


(c) in relation to an approved master‑feeder fund‑SPV structure —


(i) a company, a trustee of a trust fund or a partner of a limited partnership, where the company, trust fund or limited partnership is the approved master fund or an approved feeder fund of the structure;


(ia) a person (not being a company, an individual or a Hindu joint family) that is an approved feeder fund of the structure;


(ib) a partner of a partnership (excluding a limited partnership but including a limited liability partnership), where the partnership is an approved feeder fund of the structure;


(ic) a taxable entity in relation to an approved feeder fund of the structure, where the feeder fund is not a legal entity;


(ii) an approved 1st tier SPV of the structure;


(iii) an approved 2nd tier SPV of the structure;


(iv) an approved eligible SPV of the structure;


(v) a partner of an approved eligible SPV of the structure, where the eligible SPV is a partnership (including a limited partnership and a limited liability partnership);


(vi) the trustee of an approved eligible SPV of the structure, where the eligible SPV is a trust fund; and


(vii) the taxable entity of an approved eligible SPV of the structure, where the eligible SPV is not a legal entity,


arising from funds of the master fund or any feeder fund of the structure that are managed in Singapore by a fund manager; or


(d) in relation to an approved master fund‑SPV structure —


(i) a company, a trustee of a trust fund or a partner of a limited partnership, where the company, trust fund or limited partnership is the approved master fund of the structure;


(ii) an approved 1st tier SPV of the structure;


(iii) an approved 2nd tier SPV of the structure;


(iv) an approved eligible SPV of the structure;


(v) a partner of an approved eligible SPV of the structure, where the eligible SPV is a partnership (including a limited partnership and a limited liability partnership);


(vi) the trustee of an approved eligible SPV of the structure, where the eligible SPV is a trust fund; and


(vii) the taxable entity of an approved eligible SPV of the structure, where the eligible SPV is not a legal entity,


arising from funds of the master fund of the structure that are managed in Singapore by a fund manager.


Where the income of any approved person or person (including a company), trustee, partner, taxable entity, 1st tier SPV, 2nd tier SPV or eligible SPV is not exempt from tax, sections 13C, 13CA and 13R shall not apply to that income notwithstanding anything in those provisions.


1st tier SPV”, in relation to a master‑feeder fund‑SPV structure or a master fund‑SPV structure, means a special purpose vehicle wholly owned by the master fund of the structure.


2nd tier SPV”, in relation to a master‑feeder fund‑SPV structure or a master fund‑SPV structure, means a special purpose vehicle wholly owned by a 1st tier SPV of the structure.


Approved person” means —


(a) any approved person (not being an individual, a body of persons or a Hindu joint family);


(b) any partner of an approved partnership (including a limited partnership and a limited liability partnership);


(c) any trustee of an approved trust fund; or


(d) the taxable entity of an approved investment vehicle that is not a legal entity.


Designated unit trust” means any designated unit trust whose income does not form part of the statutory income of its trustee.


Eligible SPV”, in relation to a master-feeder fund-SPV structure or a master fund-SPV structure, means a special purpose vehicle where the net gains, profits or other benefits of all investments held by the vehicle are to go (whether directly or indirectly) to the master fund of the structure, or the master fund and one or more of the following:


(a) a prescribed person under section 13CA;


(b) an approved company under section 13R;


(c) an approved person, or an approved master fund, an approved feeder fund, an approved 1st tier SPV, an approved 2nd tier SPV or an approved eligible SPV of any structure;


(d) a prescribed sovereign fund entity or an approved foreign government-owned entity;


(e) a person (excluding an individual and a Hindu joint family) —


(i) that is not resident in Singapore;


(ii) that does not have a permanent establishment in Singapore (other than a fund manager);


(iii) that does not carry on a business in Singapore;


(iv) that is not set up solely for the purpose of avoiding or reducing the payment of any tax or penalty; and


(v) that carries on outside Singapore substantial business activity for a genuine commercial reason;


(f) a trust fund —


(i) the trustee of which is not resident in Singapore or a citizen of Singapore;


(ii) the trustee of which does not (in its capacity as such trustee) have a permanent establishment in Singapore other than a fund manager for that trust fund;


(iii) the trustee of which does not carry on any business in Singapore other than acting as such trustee;


(iv) the trustee of which (in its capacity as such trustee) carries on outside Singapore substantial business activity for a genuine commercial reason; and


(v) that is not set up solely for the purpose of avoiding or reducing the payment of any tax or penalty;


(g) a partnership (including a limited partnership and a limited liability partnership) —


(i) none of the partners of which is resident in Singapore;


(ii) that does not have a permanent establishment in Singapore (other than a fund manager);


(iii) that does not carry on a business in Singapore;


(iv) that is not set up solely for the purpose of avoiding or reducing the payment of any tax or penalty; and


(v) that carries on outside Singapore substantial business activity for a genuine commercial reason;


(h) an investment vehicle that is not a legal person —


(i) the taxable entity of which is the custodian of investments held by it;


(ii) the taxable entity of which is not a resident in Singapore or a citizen of Singapore;


(iii) the taxable entity of which (in its capacity as custodian of investments held by the investment vehicle) does not have a permanent establishment in Singapore other than a fund manager for that investment vehicle;


(iv) the taxable entity of which does not carry on any business in Singapore other than acting as such custodian;


(v) the taxable entity of which carries on outside Singapore substantial business activity for a genuine commercial reason; and


(vi) that is not set up solely for the purpose of avoiding or reducing the payment of any tax or penalty.


Feeder fund” means an investment vehicle (whether or not a legal entity) that invests its funds, or whose funds are invested, substantially and directly through a single master fund.


Master-feeder fund structure” means an arrangement comprising one or more feeder funds and the master fund through which the funds of the feeder fund or funds are substantially and directly invested.


Master-feeder fund-SPV structure” means an arrangement comprising —


(a) one or more feeder funds;


(b) the master fund through which the funds of the feeder fund or funds are substantially and directly invested; and


(c) one or more SPVs.


Master fund-SPV structure” means an arrangement comprising —


(a) a master fund; and


(b) one or more SPVs.


Master fund” —


(a) in relation to a master fund-SPV structure or master-feeder fund-SPV structure, means a company, a trust fund or a limited partnership; or


(b) in relation to a master-feeder fund structure, means an investment vehicle (whether or not a legal entity),


that enables investors to invest funds in one or more underlying investments that are managed by a fund manager.


Special purpose vehicle” or “SPV” —


(a) in relation to a master-feeder fund-SPV structure, means an investment vehicle whose only activity is the holding of investments for other investment vehicles or persons which must include the master and feeder funds of the structure; or


(b) in relation to a master fund-SPV structure, means an investment vehicle whose only activity is the holding of investments for other investment vehicles or persons which must include the master fund of the structure.


Taxable entity”, in relation to an investment vehicle (including a master fund, a feeder fund and an SPV) that is not a legal entity, means the person to whom income from the investment vehicle accrues.


Trust fund” does not include any trust that is a pension or provident fund approved by the Comptroller, designated unit trust and real estate investment trust.


If you would like to know more, please contact Bestar.




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