Singapore’s proposals to amend tax incentive requirements for funds and family offices will benefit the asset and wealth management industry, according to some industry experts.
Finance Minister Lawrence Wong announced some of the proposals pertaining to the so-called 13O and 13U schemes in the 2024 budget. The Monetary Authority of Singapore will provide further details by the third quarter of this year.
The 13O scheme applies to funds set up as private limited companies or variable capital companies in Singapore while the 13U scheme applies to all funds set up in the city state. Although both are typically used for funds managed by single family offices.
Among other things, the 13O scheme now requires a minimum fund size of S$20 million (US$14.87 million) while the minimum for the 13U scheme is S$50 million. Funds that meet the requirements are given tax exemptions.
The 13O scheme will be expanded to include Singapore limited partnerships under the new rules.
Pearlyn Chew, tax partner at KPMG Singapore, says this will enable limited partnership funds of less than S$50 million to also benefit from tax incentives.
“This would encourage startup fund managers particularly in the venture capital space to set up their limited partnership funds in Singapore as opposed to offshore,” she writes in a posting on her LinkedIn account on February 17.
PricewaterhouseCoopers says the proposals are “positive” for the asset and wealth management sector.
“We are optimistic that the authorities will adopt a measured approach in designing the revised conditions and take into account the feedback from various industry players in the process,” PwC says in a report recently.
The changes will come into effect on January 1 next year.