Singapore Holding Companies
Are You Considering Expanding Your Business Globally? Here's Why You Should Consider Creating a Holding Company in Singapore
Are you considering expanding your business globally and want to maximize your tax benefits? Creating a holding company in Singapore can offer a range of advantages, making it an ideal location for businesses looking to establish a global presence. Here are the top 10 benefits of creating a holding company in Singapore:
1. Wide Selection of Business Structures
A holding company can be structured in different forms, with the most widely used structure being a limited liability company. This provides flexibility for businesses to choose the structure that best suits their needs, with options such as a public company, private company, or exempt private company.
2. Operate Anywhere in the World
A holding company can have subsidiaries and assets in Singapore or anywhere else in the world, with no limitations on the domiciliation of assets. This makes it easier for businesses to expand globally and establish a presence in different jurisdictions.
3. Loss Insulation
A holding company can pool the resources of its subsidiaries and protect them from the losses of other subsidiaries. This offers businesses an added layer of protection against risks and potential financial losses.
4. Attractive Tax Regime
Singapore has a low corporate income tax rate, and a holding company can be exempted from foreign income tax, capital gains tax and dividend tax, as well as enjoy tax-cut schemes and tax treaties. This makes it an attractive location for businesses looking to minimize their tax liabilities and maximize their profits.
5. Simple Compliance Processes
Singapore has a transparent and efficient regulatory system, and a holding company can easily comply with the requirements of ACRA and IRAS. This simplifies the compliance process for businesses, reducing the administrative burden and streamlining operations.
6. Protect Your Assets
A holding company can shield your assets from creditors, lawsuits and other liabilities, as it is treated as a separate legal entity from the subsidiaries. This offers businesses an added layer of protection against potential risks and liabilities.
7. Succession Planning
A holding company can facilitate the transfer of ownership and management of your business to your heirs or successors, as it can hold the shares of the subsidiaries. This provides businesses with a flexible succession planning strategy that can help ensure the continuity of the business.
8. Reduce Failure Probabilities
A holding company can diversify your business portfolio and reduce the risk of failure by investing in different industries and markets. This provides businesses with a more diversified risk profile, making it easier to weather economic uncertainties and market volatility.
9. Enhance Credibility
A holding company can boost your business reputation and attract more investors, customers and partners, as it can demonstrate financial stability and growth potential. This can help businesses establish a strong brand presence, increase market share, and gain a competitive edge.
10. Access to Financing
A holding company can access more sources of funding and capital, as it can leverage the assets and income of its subsidiaries. This makes it easier for businesses to secure financing, expand their operations, and grow their business.
In addition to these benefits, Singapore offers a range of tax incentives and schemes that can further enhance the tax benefits of holding companies. Here are some key points about the tax regime for holding companies in Singapore:
- Corporate income tax: Holding companies domiciled in Singapore are subject to a flat rate of 17% on their profits, while non-resident holding companies are taxed only on the profits they earn in Singapore. Holding companies can also benefit from a partial tax exemption and a three-year start-up tax exemption for qualifying start-up companies, except for property development and investment holding companies.
- Dividend income: Dividends paid by a holding company in Singapore are not subject to tax, as there is no withholding tax or dividend tax in Singapore. Dividends received by a holding company in Singapore from its foreign subsidiaries may also be exempt from tax, subject to certain conditions.
- Capital gains: Capital gains realized by a holding company in Singapore from the sale of its shares or assets are not subject to tax, as there is no capital gains tax in Singapore.
- Foreign income: Foreign income derived by a holding company in Singapore, such as interest, royalties, or service income, may be exempt from tax if it is remitted from a jurisdiction with a headline tax rate of at least 15% and has been subject to tax in that jurisdiction. Alternatively, the holding company may claim a foreign tax credit for the foreign tax paid on such income.
- Tax-cut schemes: Holding companies in Singapore may enjoy various tax-cut schemes, such as the Pioneer Incentive, the Development and Expansion Incentive, the Investment Allowance, and the Double Tax Deduction for Internationalization, depending on their activities and investments.
- Tax treaties: Holding companies in Singapore may benefit from the tax treaties that Singapore has signed with more than 80 countries, which may reduce or eliminate the withholding tax on dividends, interest, royalties, or service income paid by their foreign subsidiaries or associates.
From tech giants like Alphabet to financial institutions like American Express and Barclays Plc, many well-known companies choose to operate as Singapore holding companies. Johnson & Johnson, for example, has nearly 260 companies across the globe, with many being household names. Meanwhile, Alphabet, the parent company of Google, reorganized its corporate structure in 2015, creating more independence for its subsidiaries and Singapore playing a key role in the new structure.
Berkshire Hathaway, which made Warren Buffet a household name, is another quintessential example of a holding company structure. The company uses Singapore as a key jurisdiction in its holding company structure, with many of its operational subsidiaries based in the country. Berkshire Hathaway started as two cotton mills that merged in the 19th Century, and Buffet acquired control over it in the 1960s. Through the acquisition of National Indemnity in 1967, Buffet set it on course to become a giant holding company.
Singapore Offers Numerous Benefits for Holding Companies
Singapore offers a wide range of benefits for holding companies, including the ability to structure in different forms, operate globally with no domiciliation limitations, and protect assets from creditors and other liabilities. Holding companies in Singapore also benefit from an attractive tax regime, with a low corporate income tax rate, and exemptions from foreign income tax, capital gains tax, and dividend tax. The city-state also offers simple compliance processes, transparent and efficient regulatory systems, and access to financing from diverse sources.
Whether you're a multinational corporation or a budding startup, setting up a Singapore holding company could be the key to unlocking your business's full potential. With a strategic location in Asia and a pro-business environment, Singapore is a top destination for holding companies looking to expand and thrive in a competitive global market.
Creating a holding company in Singapore can offer numerous benefits, such as tax efficiency, asset protection, and operational flexibility, among others. By leveraging Singapore's favorable legal and regulatory environment, businesses can establish a holding company structure that can enhance their competitiveness, profitability, and sustainability in the long run. With the right guidance and expertise, setting up a holding company in Singapore can be a straightforward and rewarding process that can unlock new opportunities and horizons for your business. So, if you are considering expanding your operations or optimizing your corporate structure, a holding company in Singapore could be the right choice for you.
At Datapres Solutions, we understand the importance of compliance with the legal and regulatory requirements of different jurisdictions, which is why we offer a range of services to assist individuals and businesses in their international operations. Contact us to learn more about our services and rates, and how we can help you achieve your goals in a legally compliant and efficient manner.
