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Singapore Holding Company

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What is a holding company? 

A holding company is a legal entity that owns stock in another company, also known as subsidiary, or an entity that exercises ownership or control over real estate, patents or other assets.

 

Why are holding companies popular? 

Holding companies are convenient legal vehicles to own shares, control subsidiaries and most importantly to reduce associated risks for shareholders.

To explain why many business owners choose to set up a holding company in Singapore we have partnered with C Advisory – a boutique firm dedicated to provide practical international corporate tax solutions to Start-ups and SMEs in their growth journey in Singapore and South East Asia.

Why choose Singapore to have a holding company?

Singapore is unmistakably in the premier league when it comes to attractive destinations for holding companies. 

 

Below are some of the key reasons as to why many business owners select the ‘Little Red Dot’ of Singapore to register their Holding Companies:

1) Favourable Domestic Tax Regime

When compared to other tax jurisdictions, Singaporean incorporated companies are able to benefit from attractive tax savings on operational income and capital gains, while shareholders do not need to suffer additional taxes on dividends. 

 

  • Singapore operates on a territorial-based regime. This means that profits are only taxed on locally sourced income and foreign income that is remitted back to Singapore.
  • Singapore's Government offers generous tax incentives for specific industries and SMEs
  • Companies can benefit from 0% tax on Capital Gains and Dividends Withholding
  • Singapore has a low corporate tax rate capped at 17%

2) Extensive Tax Treaty Network for Cross-Border Transactions 

In world characterised by increasing cross-border transactions, Singapore’s 80+ tax treaties provides a favourable avenue for effective tax optimisation.

  • Reduced withholding taxes with Treaty countries on dividend, interest and royalty income
  • Relief from double taxation
  • Clarity on tax treatment in Treaty countries

3) Preferred by investors & entrepreneurs – Singapore government has made conscious efforts over the years to reduce barriers for foreign investors and companies looking to expand into Asia.

  • Tax exemption on foreign dividends, branch profits and technical services*
  • 0% Dividend withholding tax
  • No capital control
  • Stable government with highly digitised, efficient and transparent regulatory system. (You do receive tax refunds in reasonable time)

Accounting compliance requirements

An investor, regardless of the nature of its involvement with an entity (investee), shall determine whether it is a parent by assessing whether it controls the investee. An investor controls an investee if and only if the investor has all the following:

  • Power over investee
  • Exposure, or rights, to variable returns from its involvement with the investee and;
  • The ability to use its power over the investee to affect the amount of the investor’s return

A parent shall prepare the following using uniform accounting policies under International Financial Reporting Standard (IFRS) 10 Consolidated Financial Statements:

  • Consolidated accounts of the parent and the investees*
  • Group unaudited financial statements (for submission to ACRA)*

*Price varies depending on the number of investees and complexity of the accounts of the investees.

 

In terms of Tax, Singapore has several benefits to help business owners. We have a few guides for you below: 

If you want to find out the cost of setting up a business in Singapore, you can calculate your first-year estimate here

 

Next steps

If you need help with incorporating your holding company in Singapore, contact us to learn more. We are more than happy to help!

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