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Characteristics of Holding Companies in Singapore

Updated on Sunday 29th January 2017

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Singapore is aiming to become one of the biggest financial centers in Asia-Pacific by providing tax incentives to foreign companies establishing in the city-state. Not only do foreign investors benefit from tax incentives, but for those setting up holding companies in Singapore the process will take about three days only and minimum requirements.

Our Singapore company formation experts can offer information on the types of companies available for registration in the Republic.

You can watch the video below and see how to open a holding company in Singapore:

 

Investment holding companies in Singapore

The Accounting and Corporate Regulatory Authority (ACRA) recognizes investment holding companies registered in Singapore and defines them as entities which are set up with the purpose of obtaining incomes generated through ownership of real estate property, rentals or shares in other companies. ACRA defines this type of income as “non-trade earnings”, which is why holding companies in Singapore are granted a special status and benefit from many tax and expenses deductions.

Our Singapore company formation experts can offer more information on the status of holding companies in the Republic.

What are the features of Singapore holding companies?

Holding companies are usually registered as subsidiaries and mainly known as private limited companies in Singapore. This type of structure is employed by small and medium-size foreign enterprises. Foreign investors are strongly advised to request the services of experts in company registration in Singapore and ask about the taxation system and incentives they can benefit from. Foreign businessmen must know that the registration procedure of a holding company must be done through the services provided by a professional firm.

What are the requirements to register a holding company in Singapore?

In order to register a holding company in Singapore at least one shareholder is required. The Singapore holding company is also required to have at least one resident director and as many foreign directors as it wants, but usually two directors are appointed. The shareholder is also allowed to act as a director of the holding company in Singapore. Another requirement for the holding company’s staff is to appoint a resident secretary within six months of the registration. The Singapore holding company is required to deposit a minimum share capital of S$1 and must also have a registered office approved by the Urban Redevelopment Authority.

Tax benefits for holding companies in Singapore

When incorporating a holding company, shareholders will usually take into account the taxes they are required to pay. From this point of view, Singapore has concluded many double tax treaties which allow a subsidiary to transfer dividends at very low withholding tax rates. Also, the corporate tax rates vary depending on the profits a holding company makes. Foreign businessmen opening holding companies in Singapore will also be interested in knowing that capital gains are not subject to taxation.

Deductible expenses in the case of Singapore holding companies

Holding companies in Singapore are allowed to deduct some of the expenses related to the investments they make. ACRA provides for the following types of deductible expenses in the case of holding companies:

  • -       direct and indirect expenses;
  • -       statutory expenses;
  • -       regulatory expenses.

Direct expenses include in insurance, management fees, the property tax and repairs brought to the property owned by the Singapore holding company. Among the indirect expenses are costs related to renting office space, directors’ fees, bills, allowances and salaries of the employees and even contributions to the national retirement scheme.

Regulatory expenses incurred by a holding company in Singapore include the costs associated to the accounting and audit services contracted by the company, secretarial costs and charges related to banking services.

Apart from these, holding companies in Singapore can apply for various incentives under governmental programs. The most employed ones are the Headquarter Scheme, the Pioneer Scheme, the Development and Expansion Program. Our company formation agents in Singapore can explain what these incentives consist in.

For detailed information about the registration process and investment opportunities in Singapore you can contact our specialists in company formation.

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