Setting Up Holding Company in Singapore
Mainly, small and medium foreign companies prefer setting up a holding company in Singapore. Individual investors can also register it. The move brings investors tax and incentive benefits.
Appointing an experienced registered filing agent is a key to successfully registering a holding company in Singapore in 1-3 days. It is easy and simple.
What is Meant by a Singapore Holding Company?
A Singapore holding company is a company that owns shares of other companies and controls them. It conducts no commercial activities of its own which limit its risk.
A holding company, acting as a parent or umbrella company, can have complete ownership of a business (wholly owned subsidiary). It is liable only to the amounts invested in shares or assets.
An investment holding company can also own non-controlling interests in other businesses. It can own other assets like artworks, real estate property, rental, trademarks, patents, etc.
Key Features of Investment Holding Company in Singapore
Investors can register a Singapore investment holding company as a limited partnership, a trust, or a foundation. Usually, it is registered as a limited liability company like a private limited company. They are accorded a special status and enjoy tax and expense deduction benefits.
The Accounting and Corporate Regulatory Authority (ACRA) recognizes their income obtained through ownership in other companies as non-trading earnings.
- A holding company’s liability is limited to its investment in its subsidiary
- It benefits when a subsidiary does well, and only loses its investment when its subsidiary performs miserably
- It can pool and leverage the resources of its subsidiaries
- Holding company does not meddle in the daily activities of its subsidiary
- It, however, controls subsidiary through their boards
Benefits to Consider While Starting Singapore Holding Company
Singapore regulatory framework prefers holding companies in order to attract foreign investment. Singapore holding companies,
- Can own domestic or foreign assets or subsidiaries
- Benefits from the rewarding Singapore taxation policies
- Qualifies for incentives like Headquarter Incentives
- Enjoys incentives like the Development & Expansion Incentive & Pioneer Status Incentive
- Benefits from Consolidated Books & can offset losses of a subsidiary with the gains of another
- Benefits from provisions like Financial Holding Companies Act when it comes to their compliance
- Can easily account for their passive income
- Enjoys flexibility in taxation through extensive double tax treaties network implemented by Singapore
- Less paperwork
Requirements for Setting Up a Holding Company in Singapore
Procedure for registering a Singapore holding company is straightforward. Most often, they are set up as private limited companies. The following are the requirements:
- Minimum initial paid-up capital of S$1
- At least one shareholder (an individual or a company)
- At least one local director (ordinarily resident of Singapore)
- At least one resident company secretary
- A local registered physical address for official communication
- Corporate bank account
Steps for Registering Holding Company in Singapore
You need to apply to ACRA, the Company Registrar of Singapore to register your holding company and complete only 2 procedures.
- Registering & getting approval for the company name
- Registering company with the ACRA
The process is online and can be completed using BizFile+ web portal made available by the agency. It takes only 1-3 days unless the application gets referred to the higher authorities for a review. The approval may then take up to 2 months.
Key Facts of Starting a Company in Singapore
- Singapore allows foreigners 100% shareholding
- The shareholders can increase the paid-up capital of their company at any time after its registration
- Singapore does not entertain the concept of authorized share capital
- The company must appoint a company secretary within the 6 months of its incorporation date
- The director must be over 18 years in age & have a clean record
- A Singapore citizen, Permanent Resident, or an Entrepass holder can act as the local or resident director
- The company can appoint as many foreign or local directors as it needs
- A shareholder can be the director of the company
- A sole director cannot act as the company secretary
Singapore holding companies need only S$1 as the minimum paid-up share capital. Its shareholders can arrive at the amount needed for its operational activities. The company can also amend the Articles of Association and increase its subsidiary’s capital. It must convey the change to ACRA.
Singapore Taxation for Holding Company in Singapore
Singapore investment holding company is considered as a resident company. It enjoys all the tax benefits that other local companies can claim:
- Holding companies pay company income tax which is in the range of 0%-17%
- The holding companies with a maximum of 20 members can claim a tax exemption on the first S$100,000 earned
- They may get tax exemptions on foreign-sourced earnings
- Their capital gains are tax-free
- Their subsidiaries can disburse dividends at very low withholding tax rates
- They can claim tax incentives that are granted to SMEs
Singapore holding companies can lawfully deduct some of their investment-related expenses. The deductible expenses are as follows:
- Regulatory expenses
- Direct & indirect costs
- Expenses related to audit fees, tax compliance fees, & etc
- Expenses on GST assistance compliance assurance program
- Annual listing fees
Hiring an Agent for Registering a Singapore Holding Company
The foreigners need to appoint a local registered filing agent to register their holding company. It is mandatory.
Our experts walk them through the Singapore company registration requirements they must complete. They will then assist them in preparing the documents to file with ACRA and Inland Revenue Authority of Singapore (IRAS).
They are experienced and know how to deal with the snags in the procedures for registering different types of companies, including Singapore holding company. They bring accuracy to your filings and make it a timely affair.
SBS Consulting also files an appeal with the authorities if your application for setting up a holding company in Singapore gets rejected. It also assists with the opening of a corporate bank account with one of the Singaporean banks.