Updates on Fund Tax Incentive Schemes – Section 13U

Section 13U Scheme
(Exemption of income arising from funds managed by fund manager in Singapore)

[NEW] Introduction of a “closed-ended fund” treatment as an option for non-SFO S13O, S13OA or S13U applicants

Closed-ended funds are typically funds with fixed lifespans, commonly ten years, and have designated fund raising and redemption period(s) (e.g., PE and VC funds). Typically, the AUM and LBS will also decrease over the fund’s lifespan as investments are divested, typically starting after the 5th year.

S13O, S13OA or S13U non-SFO applicants with awards commencing on or after 1 January 2025 may voluntarily opt into a “closed-ended fund” treatment with the following key features: –

(a) The annual AUM requirement will have to be met from the fund’s 1st to 5th incentive years (inclusive) and will be waived from the 6th incentive year onwards.

(b) The annual LBS condition will have to be met on a cumulative basis up to the 10th incentive year (inclusive) and will be waived from the 11th incentive year onwards.

(c) The fund is required to have its S13O, S13OA or S13U award revoked with effect from either the end of its divestment phase, or the day immediately after its 20th incentive year, whichever is earlier, in line with the premise that the fund has a fixed lifespan.

The election for the “closed-end fund” treatment is irrevocable. Existing S13O, S13OA, or S13U funds (with awards commencing prior to 1 January 2025) may apply for the “closed-end fund” treatment, and such an application would entail the revocation of the existing incentive award and the application for a new award.

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