July 13, 2025

Singapore Tax Alert: Financial Sector Incentive (FSI) – New Fund Management (FM) Listing, Singapore Equities and Basic Tier (BT) Schemes

As an update, the Monetary Authority of Singapore (MAS) has provided further information regarding the new financial sector incentives (“FSI”) announced during 2025 Budget Statement in the MAS Circular released on 3 July 2025 [1]. The FSI will now include two new schemes for fund managers as recommended by the Equities Market Review Group – FSI-Fund Management Listing (“FSI-FM Listing”) and FSI-Fund Management Singapore Equities (“FSI-FM SG Equities”). The incentives aimed at bolstering Singapore capital markets and encouraging local listings.

The existing FSI-Fund Management Scheme which provides a Concessionary Tax Rate (CTR) of 10%, will remain and be renamed the ‘FSI-FM-ST’ Scheme.

Item	FSI-FM Listing Scheme	FSI-FM SG Equities Scheme
Tax concession	Enhanced CTR of 5% on qualifying income	Tax exemption (0% tax rate) on qualifying income
Fund managers	New listing on a stock exchange in Singapore; or Wholly-owned subsidiaries of a holding company that is newly listed on a stock exchange in Singapore, and does not enjoy the listing corporate income tax rebate	Fund managers that manage qualifying funds that invest substantially in Singapore-listed equities
Admission criteria	Entity is a prescribed fund manager Achieves a primary listing on a SG exchange on or after 19 February 2025; and Minimum Assets under Management (“AUM”) of at least S$800m, in addition to a minimum number of investment professionals (“IPs”) stipulated by the MAS (in its award letter)	Entity is a prescribed fund manager Minimum AUM of at least S$250m, in addition to a minimum number of IPs stipulated by the MAS (in its award letter) Manages or provides investment advisory services (including through another fund manager) to an ‘approved fund’ i.e. at least 30% of AUM is invested in Singapore-listed equities
Qualifying income	Same as existing FSI-FM-ST scheme (i.e. income from managing / advising incentivised funds including via another fund manager)	Fees earned from managing or providing investment advisory services (including through another fund manager) to an ‘approved fund’
Commencement date of award	Later of: 1 July 2025; Date of application; or Date where all admission criteria are met
Scheme duration and award tenure	Open for application till 31 December 2028 Award tenure is 5 years and not renewable
Annual criteria	“Listing” condition: remain listed on SG exchange “IP” condition: meet minimum IP condition stipulated by the MAS “Profit distribution” condition: distribute at least 20% of its after-tax profits in every financial year (FY) as dividends	“IP” condition: meet minimum IP condition stipulated by the MAS “30% AUM” condition: Approved fund maintains at least 30% of its AUM invested in SG-listed equities throughout the FY “Net inflow” condition: If the approved fund is set up before 19 February 2025, the fund must have annual net inflows equivalent to at least 5% of the fund’s AUM in the preceding FY
Consequences on failure to comply with annual criteria	FSI-FM-ST award takes effect if fund manager cannot avail of the FSI-FM Listing award due to failure to comply with the conditions If “listing condition” is not met, fund manager is liable to pay an additional 5% tax on income previously subjected to tax at 5% CTR under FSI-FM Listing Award	Award will be revoked if “IP” condition is not met or temporarily suspended if “30% AUM” / “net inflow” condition is not met Fund manager will need to separately apply and fulfil the relevant requirements of FSI-FM-ST award to avail of the 10% CTR on qualifying income

Points of view:

Fund managers must assess the trade-offs between the listing and maintenance costs versus the benefits of the 5-year, non-renewable tax incentive. A cost-benefit analysis will be useful - factoring benefits and costs of compliance as well as current market conditions.
AUM of S$800 million is sizeable in the context of a potential listing. While there are recent trends of fund managers listed overseas (e.g. KKR & Co. Inc., TPG Inc., etc.), Asia has yet to see meaningful momentum in this space. The introduction of such tax incentives could increase interest among regional fund managers with the commercial appetite to list, supporting Singapore as a viable listing destination.
FSI-FM Listing Scheme concurrently grants the FSI-FM-ST award, which acts as a fallback to qualify for the broader 10% CTR. This dual eligibility structure is a pragmatic and flexible approach, offering certainty to fund managers.

New 15% Financial Sector Incentive (FSI)-Basic Tier schemes

In light of the need to keep our tax incentives both relevant and competitive, three new schemes have been introduced to provide 15% CTR for qualifying financial institutions.

The new schemes which will exist alongside the current FSI-Standard Tier (FSI-ST), FSI-Trustee Companies (FSI-TC) and FSI-Headquarter Services (FSI-HQ) are as follows:
- FSI-Basic Tier (“FSI-BT”) – concessionary tax rate of 15% (instead of 13.5% for FSI-ST)
- FSI-Trustee Companies (Basic Tier) (“FSI-TC-BT”) – concessionary tax rate of 15% (instead of 12% / 13.5% for FSI-TC)
- FSI-Headquarter Services (Basic Tier) (“FSI-HQ-BT”) – concessionary tax rate of 15% (instead of 10% for FSI-HQ)

The scope of qualifying activities for FSI,BT, FSI-TC-BT and FSI-HQ-BT will follow the scope of qualifying activities for FSI-ST,FSI-TC and FSI-HQ respectively.

Withholding tax exemption that is currently granted on interest payments on qualifying loans made to qualifying non-residents by FSI-HQ companies will be extended to FSI-HQ-BT companies during their award tenure.
Financial Institutions may apply for new basic tier awards from 19 February 2025 to 31 December 2028 (both sides inclusive), for incentive periods starting on or after 1 January 2025. Existing award recipients (FSI-ST, FSI-TC and FSI-HQ) may also apply for the new basic tier awards. Once approved, the basic tier awards will be granted for a period of 5 years, and the existing awards will be terminated concurrently.

Point of view:

On the backdrop of BEPS Pillar 2, a global measure to levy a minimum tax rate of 15% on multinational enterprise groups with annual revenues of at least €750 million, the new FSI-Basic Tier schemes to provide financial institutions with an option to avail of the CTR tier of 15%.

To further discuss how this impacts your business, please feel free to reach out to us.

[1] Monetary Authority of Singapore, Circular No. FDD Cir 05/2025, 3 July 2025.

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