A holding company is one of the most common organizational structures employed by businesses in Singapore. Its popularity is due to the many benefits it confers upon businesses, such as limited liability protection and tax efficiency.
Today, there are more than 300 holding companies registered in the country. However, setting up a Singapore holding company is not a decision to be made lightly. Several critical considerations must be taken into account before taking the plunge. This article will discuss some of the most important things to know when setting up a holding company.
A holding company is a company that owns other companies’ shares. It usually does not have any operations and instead relies on income from dividends and capital gains from its shares.
It might also own real estate, patents, trademarks, equities, and other assets. A holding company can either be a Singapore-incorporated company or a foreign company.
The cost of setting up this company in Singapore is approximately SGD 2,500. This includes the government filing fees and the professional fees of the corporate service provider.
There are many advantages to setting up such a company in Singapore. These include:
- Asset Protection: The main advantage of setting up a holding company is that it provides limited liability protection to the businesses that it owns. This means that if the holding company goes bankrupt, the businesses it owns will not be held responsible for the debts of the holding company.
- Tax Efficiency: A holding company can help you achieve a more favourable tax position. This is because the profits of a holding company are taxed at the corporate tax rate, which is lower than the personal tax rate. The dividends paid out by the company are also taxed at a lower rate.
- Flexibility: Such companies give you greater flexibility in conducting your business operations. All significant decisions can be made at the holding company level, such as issuing new shares, declaring dividends, and making investments.
- Incentives: The government offers several incentives to encourage foreign investment in Singapore. These include:
-The Foreign Investment Scheme offers preferential tax rates and other benefits to foreign investors.
-The Economic Expansion Incentives provide a tax exemption on profits derived from qualifying activities.
-The Intellectual Property Development Incentives offer some benefits to companies that develop and register intellectual property in Singapore.
-The Land Sales Incentives provide discounts on land purchases for commercial or industrial use.
The Financial Holding Companies Act of 2013 governs holding companies. To establish a Singapore holding company, you must keep the following points in mind:
– The company must have a minimum paid-up capital of S$1.
– Appoint at least one director who is a resident of Singapore.
– Must have a registered address in Singapore.
– Maintain a corporate bank account with a bank in Singapore.
– The company’s shareholders can be either individuals or corporations.
– The company must file its annual returns with the Accounting and Corporate Regulatory Authority (ACRA).
– The company must maintain a set of its accounting records in Singapore.
These are the key considerations to consider when setting up a company in Singapore. By following these helpful guidelines, you can ensure that your company complies with the law and enjoys all the benefits that a holding company offers.