I frequently receive inquiries from entrepreneurs and investors abroad regarding the establishment of a holding company in Singapore.
Many of them express a desire to consolidate their assets, including shares, properties, companies, and intellectual property.
I often emphasize the significant advantages of setting up a Singapore holding company, particularly for those looking to elevate their business to new levels of success.
Singapore is a global hub for multinational corporations. Many renowned organizations like Apple, Alphabet, The Virgin Group, P&G, and many others have used the holding company structure to establish their presence in the country.
Don’t let the size of big corporations intimidate you – holding company structures is not just for them.
Even small businesses and individual entrepreneurs can benefit from the advantages of a holding company.
It can be a valuable tool for small businesses seeking to grow their operations and venture into new markets.
So, if you’re ready to unlock the full potential of your business and gain a competitive edge in the global market, keep reading to discover why establishing a Singapore holding company is a smart move.
What is a Singapore holding company?
A holding company is a company that doesn’t do any direct business itself, but it owns part or all of the other companies.
The assets a holding company can typically have:
- Brand names
- Property
- Patents
- Trademarks
- Stocks
- Artwork
- Song rights
The actual business activities are carried out by the companies that the holding company owns. When a holding company owns all of another business, that business is called a “wholly owned subsidiary.”
The holding company is often called the “parent” or “umbrella” company. If a holding company is registered in Singapore, it’s called a Singapore holding company.
The companies and assets owned by a Singapore holding company can be located in Singapore or anywhere else in the world.
Benefits of establishing a Singapore holding company
Singapore is a premier destination for businesses seeking to establish a holding company.
The benefits of setting up a Singapore holding company are numerous, ranging from tax advantages and asset protection to ease of doing business and access to international markets.
Let’s look at the top 5 benefits that make Singapore an attractive choice for business owners, like you.
Tax advantages of a Singapore holding company
One of the key benefits is the favourable tax environment. Singapore operates on a territorial tax system, which means that only income derived from the country is subject to taxation.
Income and capital gains from overseas subsidiaries are not taxed here, making it an ideal location for companies with global operations.
Additionally, the extensive network of double taxation treaties reduces the tax burden for businesses operating in multiple jurisdictions.
Yet, Singapore offers various tax incentives and exemptions, such as the Global Trader Program and the Double Tax Deduction for Internationalization, making it even more appealing for businesses looking to optimize their tax position.
Asset protection and risk management
Another significant benefit of establishing a Singapore holding company is the robust asset protection and risk management framework.
The island’s legal system is known for its integrity and reliability, providing a secure environment for businesses to operate.
By setting up a holding company, you can separate your assets from your business assets, offering an additional layer of protection.
In the event of a legal dispute or bankruptcy, your assets are shielded from any claims against your business.
Moreover, Singapore has robust regulations and enforcement measures in place to combat money laundering and fraud, ensuring a safe and transparent business environment.
Ease of doing business
Singapore consistently ranks among the top countries for ease of doing business.
The government has implemented various measures to streamline administrative processes, reduce bureaucracy, and create a business-friendly environment.
Setting up a holding company here is a straightforward process, with minimal red tape and efficient registration procedures.
The well-developed infrastructure, advanced telecommunications networks, and skilled workforce make it an attractive location for businesses across industries.
Additionally, comprehensive support services and incentives are provided to help businesses thrive, including grants, tax incentives, and access to funding schemes.
Access to international markets and funding opportunities
The strategic location in the heart of Southeast Asia provides businesses with easy access to a rapidly growing consumer market of over 600 million people.
The country’s well-connected transportation and logistics networks make it a gateway to the vast Asia-Pacific region.
Besides, Singapore is home to a vibrant ecosystem of venture capitalists, private equity firms, and angel investors, offering ample funding opportunities for businesses seeking capital.
The government has also set up various initiatives and programs to promote innovation and entrepreneurship, further enhancing the funding landscape for startups and SMEs.
Robust and transparent accounting system
A well-structured and transparent accounting system is essential for businesses operating on a global scale or seeking investment.
This provides clarity and reliability in financial reporting, which is crucial for businesses operating globally or seeking investment.
Some key aspects of Singapore’s accounting regulations that make it advantageous for holding companies include:
- International Financial Reporting Standards (IFRS)
- Regulatory Compliance
- Prudent Financial Management
- Credibility and Investor Confidence
They ensure compliance with international standards, facilitate financial analysis, and instil confidence in stakeholders, making it an attractive jurisdiction for establishing a holding company.
Setting up a Singapore holding company
Now that we have explored the key benefits of establishing a Singapore holding company, let’s delve into the means of setting one up.
While the specific requirements may vary depending on the nature and size of your business, the following steps outline the general process.
Choose a business entity
Determine the most suitable business structure, such as a private limited company or a subsidiary.
Appoint Directors and Shareholders
- At least one shareholder (either local or foreign). It can be an individual or a company.
- At least one local director. They must be a permanent resident or citizen of Singapore.
- At least one resident company secretary. They must also be a permanent resident or citizen of Singapore.
Register the company
Register your holding company with the Accounting and Corporate Regulatory Authority (ACRA) in Singapore.
Ensure all necessary documents and information are submitted accurately.
- 100% foreign ownership is allowed.
- Minimum initial paid-up capital of S$1.
- Local registered physical address. It can be commercial or residential, but it shouldn’t be a PO Box.
Open a corporate bank account
Set up a corporate bank account in Singapore to facilitate your business transactions. Physical presence is not required for company setup.
Comply with regulatory requirements
Fulfil all regulatory obligations, such as obtaining relevant licenses and permits, and comply with ongoing filing and reporting requirements.
+ Accounting records must be kept for 5 years.
+ Registration for GST (Goods and Services Tax) if annual turnover exceeds S$1 million.
+ Designate a suitable individual as the Data Protection Officer (DPO).
Common Misconceptions about Singapore Holding Companies
Despite the numerous benefits and favourable business environment, there are common misconceptions surrounding Singapore holding companies.
Let’s debunk a few of them.
Singapore is a tax haven
While Singapore offers attractive tax incentives and a favourable tax system, it is not considered a tax haven. It adheres to international standards and practices and operates as a reputable financial centre.
Only suitable for large corporations
Singapore holding companies are suitable for businesses of all sizes, including startups and SMEs.
The ease of doing business and access to funding opportunities make it an attractive choice for companies at various stages of growth.
Complex and expensive to setup
Setting up a Singapore holding company is a relatively straightforward and cost-effective process, especially with the assistance of professional service providers who can guide you through the requirements.
Maximize your business potential with a Singapore holding company
During my work trip abroad, I had the pleasure of meeting numerous entrepreneurs looking for opportunities to grow their businesses.
I must say that Singapore provides a plethora of possibilities for business growth.
Whether you are a budding startup searching for the perfect place to embark on your entrepreneurial journey or an established business aiming for expansion, the nation is the ideal choice for you.
From tax advantages and asset protection to ease of business and access to international markets, Singapore provides a conducive environment for business growth.
By setting up a holding company in Singapore, you can maximize your business potential, gain a competitive edge, and position your company for success in an increasingly interconnected world.
