Singapore Holding Company Considerations
5 minute read
What is a holding company?
A holding company is a legal entity that owns shares 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 other companies and most importantly to reduce associated risks for shareholders.
- Why choose Singapore as the location for your holding company?
- How can determine if a holding company is a controlling entity?
- What are accounting and tax requirements for holding companies?
- How can Sleek help you to keep your holding company compliant?
- What factors impact the cost to prepare holding company tax filings?
Why choose Singapore as the location for your 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’ to register their Holding Companies.
1) Favourable domestic tax regime
When compared to other tax jurisdictions, incorporated companies in Singapore are able to benefit from a host of attractive tax savings on operational income and capital gains, while shareholders do not need to suffer additional taxes on dividends.
2) Extensive tax treaty network for cross-border transactions
In a world characterised by increasing cross-border transactions, Singapore’s 80+ tax treaties provide a favourable avenue for effective international tax optimisation.
3) A strategic location that is highly preferred by investors, VCs and entrepreneurs
Singapore’s government has made many conscious efforts over the past few years to reduce as many barriers for foreign investors and companies looking to expand into Asia.
Want more information on Singapore’s tax benefits? We have a few guides for you below:
- Tax Exempt Dividends: A Singapore tax resident company can enjoy tax exemption on its specified foreign income that is remitted into Singapore.
- Group Relief: Group Relief enables companies to deduct unutilised capital allowances/ trade losses/ donations of one company from the assessable income of another company in the same group.
- Incentives and schemes: The Singapore government provides a range of grants, subsidies and funding to help stimulate innovation and support business.
How can you determine if a holding company is a controlling entity?
An investor or holding company, regardless of the nature of its involvement with an other entity (investee or subsidiary), shall determine whether it is a parent by assessing whether it controls the investee (subsidiary). An investor controls an investee (subsidiary) if and only if the investor has all the following:
What are accounting and tax requirements for holding companies?
Section 201(3A) of the Singapore Company Act requires the directors of a holding company to present two reports at the end of the financial year at its Annual General Meeting.
All financial statements must comply with the prescribed Accounting Standards (IFRS 10) and give a true and fair view of the financial status of the company.
How can Sleek help you to keep your holding company compliant?
Our accounting team helps many of our holding company clients to prepare:
Consolidated Group Accounts for the Holding Company and its Subsidiaries
The purpose of this report is to show the consolidated assets and liabilities of both the holding company and its subsidiaries and hence the financial position of the entire group.
Group UnAudited Financial Statements (for submission to ACRA)
The Financial Statements convey the business activities and financial performance of the holding company. They will include the company balance sheet, income and cashflow statements.
What factors impact the cost to prepare holding company tax filings?
If you need help with incorporating your holding company in Singapore or effortlessly managing your accounting and tax requirements, contact us to learn more.
We are more than happy to help!
It is important to note, however, that setting up a bank account for a holding company in Singapore may be subject to enhanced compliance and diligence checks by the banks in Singapore due to the high money laundering risks surrounding holding companies.