Starting a Holding Company in Singapore for Asset Protection - Updated 2024

 

Many famous businesses have set up a holding company in Singapore to protect their assets, save on taxes, and reduce their risk exposure.

But what is it? How does it work? And how do you set up a holding company in Singapore?

In this article, we’ll dive deep into the topic and discuss everything you need to know about holding companies in Singapore in 2024.

Read on!

What Is a Holding Company Singapore?

A holding company is a parent business entity that holds controlling ownership over other companies or assets, such as:

  • Public or private companies

  • Real estate property

  • Stocks

  • Patents and trademarks

  • Intellectual property

  • Cash, bonds, and other interest-bearing investments

There are two types of holding companies in Singapore, namely:

  • Investment holding company (IHC) — the default corporate structure for companies outside the insurance, banking, and finance industries

  • Financial holding company (FHC) — a special business structure for owning companies that operate in the finance, banking, and insurance sectors

Note that a holding company is not the same as an operating company (also known as a wholly owned subsidiary company).

The leadership team of a holding company is not involved in the day-to-day operations of each subsidiary. It is responsible for only overseeing how each subsidiary is run, developing strategic plans, recruiting key personnel, and making major policy decisions.

Each subsidiary has its own team of people who are in charge of its day-to-day operations.

A holding company registered in Singapore is classified as a Singapore company. Its subsidiary companies can operate both in Singapore and in other countries.

What Is an Investment Holding Company in Singapore?

An IHC holds investments in other entities and receives income from these investments. There are two main features of an IHC:

  • Long-term investments and non-trade income

  • Deductible expenses

Long-Term Investments and Non-trade Income

If your IHC is holding assets such as properties and shares, you are expected to hold them for a long period — meaning they are long-term investments.

Your IHC also makes money from non-trade activities, e.g. interest, rental income, and dividend income.

But what if you want to make the most of your income by trading assets on a regular basis? The proper term for this business type is investment dealing and you should set up an investment dealing company in this case.

Deductible Expenses 

IHCs get tax deductions by subtracting the following expenses from their income:

  • Direct expenses that are associated with generating investment income, e.g. interest incurred in financing your investment activities

  • Statutory and regulatory expenses for meeting compliance, e.g. audit, accounting, company secretary services, and tax filing and bank-related charges 

  • Administrative and operating expenses that are directly attributable to running your investment holding company, e.g. rentals, salaries, utility bills, retirement contributions, and directors' fees

This is not an exhaustive list. You can refer to ACRA's website for more information on deductible expenses.
https://www.iras.gov.sg/taxes/corporate-income-tax/specific-industries/investment-holding-companies

What Is a Financial Holding Company in Singapore?

An FHC in Singapore has at least one subsidiary incorporated as a bank or a licensed insurance company. It must acquire the Monetary Authority of Singapore's written consent.

There are two types of Singaporean FHCs:

  • Ultimate FHC — A holding company that is the head of a financial group

  • Intermediate FHC — A holding company that oversees a subgroup of a larger financial group

The Financial Holding Companies Act outlines the following requirements for starting an FHC in Singapore:

  1. FHCs can be set up as a limited liability partnership or cooperative structure, and

  2. The holding company owns 50% or more of the capital or assets in its respective subsidiary, or

  3. The holding company holds 50% of the liabilities or is entitled to at least 50% of the revenue earned by the Singapore subsidiary company

Note that an independent auditor is required to keep track of an FHC’s business activities. These include:

  • Buy shares in a business as permitted by law

  • Provide support for other companies within your holding with regard to activities they carry out

  • Engage in the management of subsidiaries

  • Offer financial, advisory, and accounting processing services

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What Are the Examples of Holding Companies in Singapore?

Berkshire Hathaway and Alphabet are two examples of holding companies in Singapore.

Berkshire Hathaway

Berkshire Hathaway

Berkshire Hathaway doesn’t operate any textile mills anymore—it is now a holding company that holds more than 80 subsidiaries as well as stocks in public and private companies. Examples include:

  • Dairy Queen (Food and Beverage)

  • Borsheim's Fine Jewelry and Helzberg Diamonds (Jewelry)

  • Geico (Insurance)

  • Wells Fargo (Banking)

  • Clayton Homes (Modular Homes)

  • Buffalo News (Newspaper)


Alphabet

Alphabet, or Google to the average Joe and Jane

Alphabet was created in 2015 and holds Google and other Google subsidiaries, such as:

  • Google Capital

  • Verily

  • Calico

  • Google Singapore Pte Ltd.

  • Google Payment Singapore

By establishing itself as a holding company, Alphabet aims to focus on its core mission and give its subsidiaries more freedom to operate independently.

What are the Benefits of Setting Up a Singapore Holding Company?

The benefits of setting up a Singapore holding company include:

  1. Risk reduction and better financing terms

  2. Asset protection

  3. Intergenerational asset transfers

  4. Avoidance of double taxation

  5. No capital gains tax

  6. Dividends are exempt from tax


Risk Reduction and Better Financing Terms

A holding company structure helps the business stay afloat even if a subsidiary company goes wrong. This lowers the overall risk for the organization and hence the cost of capital.

This also means lenders are more willing to offer favorable financing terms to holding companies than single-company structures. In turn, holding companies can help their subsidiaries finance their projects in a more affordable manner by providing downstream guarantees for them.


Asset Protection and Transactions

Holding companies protect the key assets of a business by separating them from the trading company. This is called ring-fencing. 

If something happens to the trading company (like a legal dispute or when a creditor is looking to enforce a debt), only the assets of the trading company can be seized. All the key assets under the holding company remain safe. This is one reason why many high-net-worth individuals like to use a Singapore holding company.

Furthermore, holding companies easily trade patent portfolios. The segregation of assets into separate subsidiaries facilitates transactions, allowing these assets to be sold independently without the need for restructuring the business or extensive accounting audits. 

This is because the subsidiary's accounts are managed separately, simplifying the process of demonstrating the value of the entity being traded to potential buyers.

Holding companies also acquire and dispose of assets held by a subsidiary without difficulty.

Intergenerational Asset Transfers

A holding company can also set up succession planning for its subsidiaries. Tax deferrals are provided for asset transfers while ensuring that the whole estate can be transferred as a single unit.

In addition, holding companies get the following benefits:

  • Assets from subsidiaries from different countries may be transferred as a single unit

  • There are clear governance rules for family wealth that can be implemented and established consistently

  • Risk management and asset protection may be outsourced to professional managers through a single delegation

Different intergenerational strategies can be developed to integrate asset holdings with additional tools such as foundations, wills, family offices, and lasting Power of Attorney.

Avoidance of Double Taxation

Singapore has signed the Avoidance of Double Tax Agreement (DTA) with over 70 countries, preventing foreign companies from getting taxed twice.

However, DTA tax benefits are available only if the Singapore holding is a tax resident of Singapore.

Singapore tax residency is determined by the "control and management" test. In other words, a holding company can be classified as a resident company if its business and strategic decisions are made in Singapore.

On the flip side, foreign-owned holding companies are classified as non-residents. To be considered a tax resident, they will have to comply with the Inland Revenue Authority of Singapore (IRAS) and obtain a Certificate of Residence (COR). This is submitted to foreign tax authorities to claim benefits.

The IRAS looks at five factors when issuing a COR:

  1. The location where control and management are exercised in Singapore

  2. Whether the reasons are valid for setting up the holding company in Singapore

  3. Whether Singaporean companies provide the holding company with administrative services

  4. Whether the company has related entities with business activities in Singapore

  5. Whether the company has an executive director based in Singapore

No Capital Gains Tax

A parent company's selling of assets or shares is not a taxable event at both the subsidiary and holding company levels.

However, when capital gains are the source of the company's income — or if a sold asset's holding period is short — they are treated as ordinary income and become subject to income tax. 

As of 1 Jan 2024, gains from the sale or disposal of foreign assets by a relevant entity that are received in Singapore will be treated as foreign-sourced income.

Dividends are Exempt from Tax

Holding companies receiving dividends from their foreign subsidiaries may enjoy tax exemptions from corporate tax, as long as the "foreign headline tax rate" and "subject to tax" conditions are fulfilled.

This means a subsidiary's profits should be taxed at least 15% (theoretically) in its home country and that no payment should be made because of other tax incentives or exemptions.

Note that dividends from tax-neutral or low-tax jurisdictions may be taxed in Singapore when distributed to the holding company. As of writing this post, Singapore has no controlled foreign company rules. Undistributed foreign income from subsidiaries may not be taxed.

These provisions reduce, and in rare cases eliminate, the tax burden carried by the company structure.

Other Incentives for the Holding Companies

Singapore holding companies are eligible to apply for the Headquarter Incentive. This incentive is given to multinational companies to encourage them to relocate their regional or international headquarters to Singapore.

There are also other incentives in place, such as the Development and Expansion Incentives (DEI). During the tax relief period, qualifying holding companies may be taxed at a reduced rate (no less than 5%) of the expansion income. Expansion income may come from activities that exceed the company's base profit and is determined by average annual income three years after the tax relief period.

You can read more about these incentives over at EDB Singapore.
https://www.edb.gov.sg/en/how-we-help/incentives-and-schemes.html

What’s more, Singapore offers tax incentives for intellectual property (IP) holdings through the IP Development Incentive. This incentive entails a 5% to 10% concessionary tax rate to qualifying royalty and other IP-based revenue until 2028. 

Holding companies can apply for further deductions for expenditures incurred for Research and Development activities, licensing, and IP registration.

What Are Some Additional Tax Benefits for Holding Companies in Singapore?

In addition to the benefits described above, Singapore offers a low corporate income tax and waives withholding tax on dividends for holding companies. Here are more details:

  1. Low Corporate Income Tax — corporate tax is set at 17% for holding companies set up as private limited companies

  2. No Withholding Tax on Dividends — dividends paid to non-residents are not subject to withholding taxes

  3. No Controlled Foreign Company (CFC) Rules — the main goal of CFC rules is to stop companies from moving their corporate profits to low or no-tax countries. No CFC rules exist in Singapore

  4. No Thin Capitalization Rules — however, transfer pricing rules still apply. This means if there is a transaction between a holding company and its subsidiary, it is important to ensure the prices should be similar to the prices between two unrelated parties. To ensure this, it is recommended that you consult with a tax advisor.

What are the Challenges Faced by a Singapore Holding Company?

The challenges faced by a Singapore holding company are divided into those faced by parent companies, those faced by subsidiaries, and those faced by shareholders.

Note these challenges apply to holding companies in general and not just to Singapore holding companies.

Challenges Faced By Parent Companies

Managers of holding companies are often pulled in different directions due to their subsidiaries' demands. They sometimes make crucial business decisions about a subsidiary without knowing about the subsidiary or its business. This lack of information and understanding can lead to suboptimal decision-making processes.


Challenges Faced By Subsidiary

Managers of subsidiaries may also not have enough knowledge about their parent company's overall strategies or goals. 

A good example is when a subsidiary wants to purchase raw materials from a supplier but the parent company wants it to buy them from another one of its subsidiaries instead. 

This type of decision-making leads to conflicts of interest and would result in more bad decisions down the line.

Challenges Faced By Shareholders

The lack of transparency due to the opaque business relationships that come with this company structure is a disadvantage for the minority shareholders who can't get a clear picture of the entire business.

Meanwhile, the majority of owners can take advantage of transfer pricing and preferential supplier relationships. This is a severe issue if ownership of a holding company and its subsidiaries are not symmetrical.

What is the best business structure for an investment holding company in Singapore?

The best business structure for an investment holding company in Singapore is private limited.

There are also other structures that an IHC can be set up as, such as:

  • Limited Liability Company (LLC) — examples include Private Limited Company (Pte Ltd) and Exempt Private Company (EPC)

  • Limited Partnership

  • Trust or foundation

The exact structure you choose depends on various factors, including:

  • Your Risk appetite — whether you prefer limited liability or not

  • Tax considerations — whether you want to pay corporate tax (max 17%) or personal tax (max 24%)

  • Fundraising needs — if you are raising capital from investors, most prefer to invest in corporate vehicles with separate legal entity

You may refer to our comprehensive guides about Singapore company structure and advantages of setting up a Pte Ltd for more information.

What are the Requirements for Registering a Holding Company in Singapore?

The requirements for registering a holding company in Singapore include a minimum initial paid-up capital of S$1, at least one shareholder (either local or foreign), and at least one local director who is a permanent resident or citizen of Singapore.

Additional requirements for the company incorporation process include:

  1. At least one resident company secretary who is a permanent resident or citizen of Singapore

  2. Local registered physical address. It can be commercial or residential, but it shouldn't be a PO Box

  3. Corporate bank account

  4. Registration for VAT (GST) if annual turnover exceeds S$1 million

In addition, you don’t need a physical address to set up a holding company, and 100% foreign ownership is allowed.

How to Register a Holding Company in Singapore

To register a holding company in Singapore, begin by contacting a corporate service provider (CSP) like Piloto Asia.

The next steps are:

  1. Choose a company name

  2. Have an initial call/video meeting with your CSP

  3. Choose your company structure (e.g. Pte Ltd), shareholding and directors

  4. Get your CSP firm to hire a local nominee director if you cannot appoint one yourself

  5. Ask your CSP to get your company name approved by the ACRA and submit the required documents for company registration. Your holding company will be live within an hour after submitting documents

  6. Open a corporate bank account remotely (takes around a month)

  7. Apply for an employment pass (optional, which takes a round a month)

The end-to-end company registration process takes about a week. Read up on our comprehensive guide to company registration in Singapore for more information.

Starting a Holding Company in Singapore Simplified

If you decide to set up a holding company anywhere in the world, choose Singapore. The country's tax policies, legal system, and regulatory framework make it one of the best places to establish a holding company.

You can work with a corporate service provider to help you with any questions regarding your company's establishment.

At Piloto Asia, we'll be more than happy to assist you with all aspects of Singapore company set up and registration.

Frequently Asked Questions About Holding Company in Singapore

  • A holding company in Singapore is essentially a parent company that owns controlling shares in other companies, known as subsidiaries. It doesn’t usually engage in direct business activities but focuses on managing and overseeing these subsidiaries. The structure is particularly beneficial as it allows for significant influence over subsidiaries’ management through majority stock ownership, board control, or majority voting power. Key benefits include asset protection—subsidiaries' assets are safeguarded if the holding company faces financial troubles—and tax efficiency, as profits from subsidiaries can be consolidated, potentially at lower tax rates. The definition and operation of holding companies in Singapore are guided by the Singapore Companies Act, emphasizing their control over subsidiaries.

  • A holding company serves multiple purposes:

    • Control Over Other Companies: Gain control over other companies by owning more than 50% of their voting stock, influencing management decisions and corporate policies.

    • Singapore Asset Protection: Protect assets like real estates, patents, and stocks. In case of legal lawsuit, the assets owned by the holding company are typically safeguarded from liabilities of individual businesses.

    • Reduced Risk: Mitigate risk by diversifying investments across various industries. This balances out potential poor performance in one sector.

    • Ease of Transfer: Simplifies the transfer of business ownership through share transactions in the holding company, avoiding complex legal processes.

    • Tax Planning: Offers potential tax advantages, such as exemptions from capital gains tax when selling subsidiaries at a profit.

    • Cost Savings: Achieve cost efficiencies by consolidating operations such as HR, IT, and other back-office functions.

    • Better Financing Terms: Secures favorable financing due to lower risk, enhancing financial stability.

    It is important to consider the potential downsides of a holding company structure, such as increased complexity and decreased oversight of individual businesses. Professional advice should always be sought when considering this type of structure.

  • Interested in setting up a holding company in Singapore? Here’s how you can begin:

    • Choose a Company Name: Select a unique and available name for your company. We can assist in checking the availability and suitability of your preferred name to ensure it meets regulatory requirements.

    • Consult with our Experts: Schedule a call or video meeting with our company registration advisors to discuss your business plan and navigate the complexities of setting up a holding company in Singapore. Our team is here to provide personalized guidance and support tailored to your specific needs.

    • Decide Your Company Structure: The most common structure for a holding company in Singapore is a private limited company (Pte Ltd).

    • Legal Requirements: In our consultations, learn about key legalities such as appointing a resident director. If you don’t have one, we'll discuss our nominee director services. We also cover share capital requirements and other essential legal considerations for your holding company.

    • Register with ACRA: We guide you through the entire registration process.

    • Expand Your Business and Set Up Subsidiaries: With our strategic advice, establish subsidiaries under your holding company in Singapore and globally. We'll guide you through the intricacies of setting up these entities to effectively expand your business network.

    Ready to get started or need more information? Contact us for a personalized session with our experts to streamline your journey in establishing a Singapore holding company. Fill in our inquiry form, and we’ll reach out within one business day!

  • In Singapore, holding companies typically fall into two categories:

    • Investment Holding Company (IHC): This is the default structure for businesses outside banking, insurance, and finance. It focuses on long-term investments and generates non-trade income, such as dividends or rental income. IHCs enjoy certain deductible expenses related to their investment activities​​.

    • Financial Holding Company: Designed for companies in the finance, banking, and insurance sectors, this structure has at least one subsidiary that's a bank or licensed insurance company in Singapore​​.

    Commonly registered as a private limited company, a holding company in Singapore can own controlling or non-controlling interests in other businesses, providing flexibility across various industries. It can buy shares in businesses, provide support and management to subsidiaries, and engage in other strategic activities​​.

  • Investment holding companies in Singapore typically hold long-term assets like real estate and shares and earn income from non-trade activities such as dividends and rental income. These entities are favored for their tax benefits, with a corporate tax rate of 17% and no Capital Gains Tax. They are eligible for deductions on investment-related expenses, including direct costs and operational expenditures. Unlike companies involved in trading assets, investment holding companies focus on managing and holding assets over time. This structure's appeal is evident in its adoption by major global companies, showcasing Singapore as a prime location for investment holding entities.

  • A holding company has several key characteristics:

    • Limited Liability: Shareholders' liability is limited to the capital, with separate assets from subsidiaries for additional protection.

    • Control Over Subsidiaries: Typically holds a controlling interest in other companies, allowing it to influence management decisions.

    • Centralized Management: Offers centralized oversight and efficiency, with resource pooling across subsidiaries.

    • Unrestricted Shareholders: Allows diverse investment opportunities, without restrictions on shareholder identity.

    • Investment Potential: Capable of investing in a variety of assets, including real estate, patents, trademarks, and stocks.

    • Risk Protection: Insulates the holding company from its subsidiaries' liabilities.. If a subsidiary goes under, the holding company's assets remain protected.

    • Tax Incentives: Holding companies in Singapore enjoy high tax incentives, including a 17% corporate tax rate and no capital gain tax or dividend taxes.

    • Financial Flexibility: Greater ability to raise capital and access favorable financing.

    • Flexible Structure: Adapts to diverse management and operational strategies.

    • Business Succession Planning: Eases ownership transfer for future generations.

  • Setting up a holding company in Singapore offers several advantages:

    • Tax Benefits: Enjoy tax-free dividends and capital gains, along with a 17% corporate tax rate and lower withholding taxes from certain countries.

    • Loss Minimization and Flexible Management: Manage their assets and subsidiaries effectively, with strategic tax payment timings.

    • Operational Flexibility: Operate globally, utilizing Singapore's strategic location for international business.

    • Ease of Setup: Singapore's straightforward process makes it an attractive choice for investors and business owners.

    • Group Relief: Offset losses from one company against profits of another within the same group for tax relief.

    • Strategic Location: Singapore's strategic location as a financial hub and its well-developed infrastructure make it an attractive base for holding companies with international operations.

  • In Singapore, holding companies are subject to a corporate tax rate of 17%. However, they benefit from several tax incentives and exemptions:

    • Partial Tax Exemption: The initial chargeable income is partially exempt, with 75% being tax-free.

    • Start-Up Tax Exemption: Qualifying new companies can enjoy tax exemptions for the first three years.

    • No Capital Gains Tax: There's no tax on profits from selling shares, assets, or subsidiaries.

    • Deductible Expenses: These include direct expenses associated with investment income, compliance costs, and operational expenses.

    • Dividend Tax Treatment: Dividends paid by Singapore companies to shareholders are not subject to withholding tax, allowing for tax-free distribution.

    This comprehensive tax structure makes Singapore a favorable location for holding companies.

  • Holding and operating companies serve distinct but complementary roles:

    • Holding Companies (Parent Companies): They own controlling stakes in other companies (known as subsidiaries) and are primarily focused on strategic decision-making. Holding companies typically do not involve themselves in the day-to-day operations of their subsidiaries. Their key roles include overseeing the management, making investment decisions, and handling asset allocation and risk management. This structure allows for legal and financial separation from the operational entities, providing a layer of protection against liabilities.

    • Operating Companies (Subsidiaries): These are the businesses that carry out the daily operations, producing goods or services. Operating companies handle the practical aspects of the business, including sales, marketing, production, and customer service. They are responsible for the day-to-day decision-making that directly impacts the business's operations and performance.

    This division of responsibilities allows holding companies to manage risk and assets more effectively, maintaining a strategic overview while allowing operating companies to focus on the practical aspects of running the business.

  • 'Inserting a holding company' involves restructuring a company's ownership by establishing a new corporation as the parent company, which then acquires the existing business's shares. This approach offers several strategic benefits:

    • Asset Protection: Shields assets from operational liabilities.

    • Tax Efficiency: Potentially reduces tax liabilities.

    • Ease of Business Transfers: Simplifies ownership changes and capital raising.

    • Centralized Control: Enhances management over the subsidiary and future acquisitions.

    Given the complexities of inserting a holding company, expert guidance is essential. Piloto Asia offers specialized assistance in this area. Our team can navigate the legal, tax, and financial aspects to align with your business goals. Contact us for tailored support in your holding company transition.

  • Offshore asset protection is a strategic approach where assets are placed in jurisdictions known for providing strong legal protections, like Singapore. Singapore has become a favoured offshore jurisdiction for its strong legal structures, attractive tax regime, and world-class banking system. These elements provide a secure environment, enhanced financial privacy, and robust defence against potential financial risks, benefiting foreign individuals and businesses seeking asset protection.

    However, it's important to stress that offshore asset protection should not be used to evade taxes or legal obligations. Misuse has led to global efforts to combat tax evasion, placing a premium on transparency.

    Given the complexities involved, professional guidance is highly recommended. At Piloto Asia, we specialize in services such as company incorporation for foreigners. Feel free to reach out to our team for personalized advice and assistance.

  • Singapore is a preferred destination for asset protection, known for its strong legal framework and advantageous tax policies. Key strategies include the use of trusts, limited and general partnerships, offshore establishments, and holding companies. Establishing a holding company for asset protection is increasingly popular, offering an efficient way to manage diverse assets like real estate and investment portfolios. This strategy not only provides a layer of protection against legal claims but also leverages Singapore’s corporate governance and tax benefits.

    Moreover, Singapore's status as an offshore asset protection hub is bolstered by initiatives like tax-free trading of Investment Precious Metals (IPM), further enhancing its appeal beyond tax incentives.

    In summary, Singapore's combination of legal robustness, tax efficiency, and innovative asset protection methods like holding companies make it an attractive option for effective wealth management.

  • Singapore's trust framework offers several advantages, including:

    • No formal registration requirement for trusts.
    • Strict confidentiality and banking secrecy laws.
    • Protection of settlors from forced heirship claims.
    • Flexibility for settlors to retain control and actively manage trust investments.
    • Option to appoint a protector to supervise trustees' conduct.
    • Absence of estate duty, inheritance tax, and capital gains tax.
    • Potential income tax mitigation for foreign trusts.
    • Robust legal and regulatory framework providing a stable environment for trusts.
    • Wide network of tax treaties providing potential tax benefits for trusts.
    • Access to a skilled and experienced workforce in the finance and legal sectors, offering professional services to trust.

  • In Singapore, tax computation for an investment holding company primarily involves subtracting allowable expenses from its non-trade income. Key aspects include:

    • Non-Trade Income: This typically includes income from dividends, interest, and rental properties.

    • Deductible Expenses: These expenses can be broadly categorized into:
      a) Direct Investment Income-Related Expenses: Costs directly linked to generating investment income, such as interest on loans taken for investment purposes.
      b) Statutory and Regulatory Compliance Costs: Expenses incurred to meet legal and regulatory requirements, including audit fees, accounting fees, and company secretary services.
      c) Operational Expenses: Day-to-day expenses related to running the holding company, like office rentals, utility bills, and salaries.

    • Corporate Tax Rate: Investment holding companies are subject to Singapore’s corporate tax rate, which is 17%. However, certain tax exemptions and incentives may be applicable.

    • Financial Reporting Compliance: Accurate financial reporting is crucial to ensure compliance with Singapore's tax laws and to correctly compute the taxable income.

    Understanding the specific expenses that can be deducted and accurately calculating non-trade income is essential for investment holding companies to comply with tax regulations and optimize their tax liabilities in Singapore.

  • In Singapore, companies are required to maintain their accounting records and supporting documents for a minimum of five years from the relevant Year of Assessment (YA), as mandated by the Inland Revenue Authority of Singapore (IRAS).

    This means that all financial records, invoices, receipts, bank statements, and other relevant documents, must be properly documented and stored for at least five years. This practice is not only crucial for maintaining accurate financial records but also facilitating proper tax reporting and compliance.

    Please note that non-compliance with these obligations may result in penalties and/or the disallowance of claimed expenses. Therefore, adherence to these record-keeping requirements is essential for all companies operating in Singapore.

  • While it’s ideal to record your business transactions daily to ensure accuracy and prevent information overload, the frequency may vary depending on the nature and volume of your business transactions.

    Regardless of the frequency, it is crucial to establish a regular and consistent schedule for recording transactions. Waiting until the end of the month or financial year can lead to overwhelm and potential inaccuracies.

    To make the process easier, consider using accounting software like Xero, QuickBooks or FreshBooks. These tools can automate the recording of transactions, making it easier to keep your records up-to-date and accurate.

  • Having a separate corporate bank account for your business expenses is highly recommended. It allows you to clearly distinguish your personal expenses from business expenses, enabling better financial management and simplifies record keeping.

    A corporate bank account also enhances your company’s professional image, as clients and vendors will be dealing with a business account rather than a personal one. Furthermore, it makes it easier to manage taxes, as all business transactions and financial activities are contained within a dedicated account. Therefore, a corporate bank account is a crucial tool for effective business management.

  • Effective from March 15, 2023 , new applicants seeking PR status through Singapore's Global Investor Programme (GIP) will face revised investment requirements. They must invest at least S$10 million in a new or existing business or S$25 million in an approved fund. Individuals establishing family offices are required to deploy and maintain a minimum of S$50 million in any of the four investment categories.

  • The aim of the revised investment requirements is to selectively appeal to individuals who can make a greater economic impact and have stronger ties to Singapore. The changes are intended to attract high-caliber business owners, filtering out applicants and narrowing the field to higher-quality applicants.

  • In Singapore, the tax status of dividends depends on several factors. If a Singapore resident company pays the dividends, they are typically exempt from further taxation due to the one-tier corporate tax system. This system considers the tax paid by the company as the final tax. Similarly, foreign dividends received in Singapore by resident individuals are generally not taxable, subject to certain conditions.

    On the other hand, dividends paid by co-operatives or foreign-sourced dividends received through a partnership in Singapore may be subject to income tax. Income distributions from Real Estate Investment Trusts (REITs) received through a partnership or from conducting a trade, business, or profession in REITs are also taxable.

    It's important to note that dividends are considered income in the year they are declared payable to the shareholders. If you receive taxable dividends, you must declare them in your Income Tax Return under ‘Other Income’, unless the organization paying the dividends has already provided this information to IRAS.

  • Yes, dividends distributed by resident companies in Singapore are exempted from the individual’s taxable income. This is due to Singapore’s one-tier corporate tax system, where the tax paid by a company on its chargeable income is the final tax. As a result, individuals who receive dividends from resident companies do not need to include these dividends in their taxable income.

  • Using a holding company in Singapore can enhance your privacy by creating a separate legal entity to oversee and own other companies. This structure offers a degree of anonymity for the actual owners, as the direct ownership details are less exposed. Key points to consider:

    • Privacy Through Separation: The holding company acts as a buffer, separating the ownership of assets or businesses from the individuals.

    • Compliance with Regulations: Adhering to both local and international laws on transparency and disclosure is mandatory. While privacy is achievable, it must be balanced with legal requirements.

    • Expert Consultation: To navigate these waters, it's advisable to seek professional advice. Experts can help align the holding company's structure with privacy goals while ensuring legal compliance.

    For tailored advice on setting up and using a holding company for privacy while adhering to all regulations, consider consulting with specialists in corporate structuring.

  • The corporate tax rate in Singapore is flat at 17%. This means that all companies in Singapore, regardless of their size or industry, pay the same amount of tax on their profits.

  • Holding companies in Singapore are required to file annual returns, estimated chargeable income (ECI) returns, and corporate income tax (CIT) returns. The filing deadlines for these returns are as follows:

    • Annual return: November 30 of the following year.

    • ECI return: Within three months from the end of financial year.

    • CIT return: November 30 of the following year.

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