On 19 August 2026, the Monetary Authority of Singapore (MAS) released the most substantive Singapore fund manager tax breaks package the city-state has offered to date. The measures are a direct competitive response to Hong Kong’s carried interest concessions, and they affect every fund management group currently weighing where to domicile its management company. Income earned from calendar year 2026 may qualify for exemption at Year of Assessment (YA) 2027, once the enabling legislation passes at Budget 2027 in February.
The three pillars of this Singapore fund manager tax breaks package are: a full tax exemption on profit-related returns, covering carried interest and performance-linked profit-sharing from qualifying funds; a new MAS Hedge Fund Investment Programme that deploys government capital alongside committed managers; and a dedicated Investment Management Track within the Overseas Networks & Expertise (ONE) Pass visa framework for senior investment professionals.
Understanding Singapore fund manager tax breaks
What are profit-related returns?
Profit-related returns are contractual profit-sharing arrangements, including carried interest and performance-linked bonuses, paid to fund managers for providing fund management services. The distinction from ordinary salary is not semantic: the exemption applies where the payment flows from the fund’s profitability, not from a fixed remuneration schedule. A management fee paid at 2% of assets under management regardless of performance does not qualify. The benefit extends to corporate entities, partnerships, and individuals receiving such returns directly or indirectly.
The applicable fund types include single-family offices, hedge funds, venture capital funds, and other institutional funds, provided they already sit within Singapore’s existing fund tax incentive regimes.
Which funds qualify?
Qualifying funds are those operating under Sections 13D, 13O, 13OA, 13U, and 13V of the Income Tax Act 1947 (ITA). Accessing the profit-related returns exemption requires that a fund already meets the conditions of one of these sections. The substance requirements these regimes demand are real: minimum headcount, operational presence in Singapore, and a locally-based manager are all assessed. A structure where the investment team sits outside Singapore while a nominal manager signs off locally is not what MAS has in mind, and I have not seen such arrangements survive MAS review under the 13U regime.
The carried interest tax exemption: how Singapore fund manager tax breaks work
How the exemption works from YA 2027
The exemption applies from YA 2027, covering income from calendar year 2026. Full technical conditions will be released at Budget 2027. MAS has indicated the regime is designed to mirror prevailing commercial arrangements, which includes carried interest and performance-linked profit-sharing for fund managers and investment professionals. That framing gives practitioners enough to work with for initial planning, but it is not a substitute for the enacted rules.
Eligible recipients and profit-sharing structures
The exemption covers fund managers, investment professionals, and entities providing fund management services. The profit-sharing arrangement must be contractual and tied to the qualifying fund’s profitability. Arrangements with fixed floors, or structured to pay regardless of realized gains, are unlikely to qualify.
MAS has confirmed that carried interest and performance-linked profit-sharing are within scope. Other forms of economic benefit from fund profits may qualify, but that detail awaits Budget 2027.
Singapore versus Hong Kong: the structuring choice
Hong Kong’s carried interest concession under the Inland Revenue Ordinance (IRO) provides a concessionary tax rate on qualifying carried interest, and the regime has been in force long enough that its technical conditions are settled. Singapore’s proposed exemption is broader in headline terms (a full exemption rather than a concessional rate), but the conditions remain unpublished until February 2027. For managers who need certainty before year-end 2026, Hong Kong’s established framework has a practical advantage.
For managers who can wait, the Singapore proposal currently looks more favorable on current terms. The jurisdictional comparison for fund vehicles across Singapore, Hong Kong, and Dubai turns on three factors: where the investment team physically sits, where limited partners want to see substance, and which jurisdiction’s regulatory environment fits the fund’s strategy. Dubai’s Dubai International Financial Centre (DIFC) and Abu Dhabi Global Market (ADGM) operate under separate UAE corporate tax rules, with a 0% rate for a Qualifying Free Zone Person (QFZP) on qualifying income, but they are not competing on the same carried interest exemption logic as Singapore and Hong Kong in this cycle.
| Criterion | Singapore (YA 2027) | Hong Kong (current) |
|---|---|---|
| Carried interest treatment | Full exemption (proposed) | Concessionary rate |
| Technical conditions | Pending (Budget 2027) | Published and settled |
| Qualifying fund sections | Ss. 13D/13O/13OA/13U/13V (ITA) | Eligible fund (IRO) |
| Substance requirement | Yes (headcount, local manager) | Yes (nexus test) |
| Government co-investment | Yes (Hedge Fund Programme) | No direct equivalent |
The MAS Hedge Fund Investment Programme and ONE Pass track for fund managers
MAS Hedge Fund Investment Programme
MAS will invest alongside hedge fund managers who commit to establishing or deepening their Singapore presence. The programme targets global and regional managers, aiming to anchor them in Singapore, grow the local hedge fund ecosystem, and develop ancillary services including prime brokerage infrastructure.
From what I’ve observed advising managers on Singapore fund presence decisions, the MAS co-investment signal matters as much to institutional limited partners as the tax exemption itself. A manager whose Singapore office satisfies a government allocator’s due diligence has a credible basis for subsequent conversations with pension funds and sovereign wealth funds across Southeast Asia, and that is a dimension Hong Kong’s current incentive package does not replicate.
Investment Management Track under the ONE Pass framework
The standard ONE Pass requires a fixed monthly salary of at least S$30,000 per month. The option to combine a fixed monthly salary of at least S$22,500 with vested non-cash components such as employee stock options (ESOP) and employee share ownership (ESOW) to reach the S$30,000 threshold applies to the separate ONE Pass (AI and Tech) track, not to the standard pass. The new Investment Management Track sits within this framework and is designed for senior asset management and investment professionals whose pay is weighted toward performance-linked returns rather than fixed salary.
A senior portfolio manager earning S$15,000 fixed and the remainder in carried interest has found it difficult to satisfy the standard ONE Pass threshold on paper. The new track is intended to recognize fund outcomes and vested performance returns in the assessment. Full eligibility criteria are expected alongside the broader Budget 2027 conditions.
The ONE Pass is a five-year personalised work pass: holders can work for multiple employers simultaneously or start businesses, and hold directorships in multiple companies. Dependants receive a Dependant’s Pass or Long-Term Visit Pass and must apply separately for their own work passes if they wish to work in Singapore. For a fund manager building a Singapore presence with a small team, this is materially more flexible than an Employment Pass (EP) tied to one sponsoring entity. The full Singapore work pass options for investment professionals are worth reviewing alongside the ONE Pass Investment Management Track, since the right choice depends on salary structure and team composition.
For fund managers making Singapore their personal tax base, the tax residency framework for globally mobile founders is now reinforced by the carried interest exemption. Singapore income tax on qualifying carried interest from YA 2027 would be zero, rather than the progressive rates reaching 24% above S$1,000,000 in chargeable income that would otherwise apply. Taken together, the three components of the Singapore fund manager tax breaks package address income tax, access to government capital, and visa flexibility for talent in a single announcement. Managers should set a reminder for Budget 2027 and avoid committing their 2027 structures before the technical conditions are published.
FAQ
How does the carried interest tax exemption affect fund manager compensation strategy from 2027?
The exemption shifts the optimal compensation structure away from fixed salary toward contractual profit-sharing. A fund manager receiving S$500,000 in carried interest from a qualifying 13U fund would, under the proposed regime, pay no Singapore income tax on that amount from YA 2027. The same amount paid as a discretionary performance bonus would be taxed at progressive rates reaching 24% above S$1,000,000 in chargeable income. Managers should review existing profit-sharing agreements now to confirm they are contractual and tied to fund profitability. Budget 2027 will also clarify whether anti-avoidance provisions restrict reclassification of pre-existing arrangements.
What are the economic substance requirements a fund must meet to qualify for these incentives?
Funds must qualify under one of Sections 13D, 13O, 13OA, 13U, or 13V of the ITA, with the 13U regime requiring at least three Singapore-based investment professionals and minimum assets under management. Additional conditions specific to the profit-related returns exemption will be published at Budget 2027.
Can foreign investment professionals relocate to Singapore under the new ONE Pass Investment Management Track while benefiting from the carried interest exemption?
Yes, in principle, though the two programs have independent eligibility conditions. The ONE Pass Investment Management Track addresses visa and work authorization. The carried interest exemption addresses tax treatment once the manager provides fund management services to a qualifying fund from Singapore. A foreign professional who relocates, qualifies for ONE Pass, and begins managing a qualifying fund from Singapore should, once Budget 2027 legislation is enacted, have both their immigration status and their carried interest returns covered. For the full Singapore fund manager tax breaks package to work in practice, the manager must be Singapore-based and managing a qualifying fund for the same period: the tax exemption does not extend to returns earned while based elsewhere.
