Start a Holding Company in Singapore – 2025 Guide to Protect & Grow Your Assets

 

Thinking of protecting your assets and optimizing your business structure?

Many global entrepreneurs and corporations have set up a holding company in Singapore — not just for asset protection and tax efficiency, but also to create a stable, growth-friendly foundation for their business interests.

But how exactly does a holding company work in Singapore? What are the legal, financial, and operational steps involved? And most importantly, is it the right move for you in 2025?

In this guide, we’ll explain everything you need to know about setting up a Singapore holding company, from the core benefits and tax considerations to real-world use cases and step-by-step setup.

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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: It’s important to understand that a holding company is not the same as an operating company (often referred to as a wholly owned subsidiary). A holding company typically doesn’t engage in day-to-day business operations — instead, it owns and controls other companies that do.

The leadership team of a holding company does not manage the daily operations of its subsidiaries. Instead, it focuses on strategic oversight — such as setting long-term goals, appointing key executives, and making high-level policy and investment decisions.

Each subsidiary operates independently, with its own management team handling day-to-day business activities like sales, staffing, and operations.

When a holding company is registered in Singapore, it is recognized as a Singapore-incorporated entity. However, its subsidiaries can be based in Singapore or overseas, allowing for flexible cross-border structuring and expansion.

What Is an Investment Holding Company (IHC) in Singapore?

An Investment Holding Company (IHC) in Singapore is a business entity that holds investments in other companies or assets and earns non-trade income from those holdings. This typically includes income from dividends, interest, and rental properties — rather than profits from selling goods or services.

Two key characteristics define an IHC:

1. Long-Term Investments & Non-Trade Income

An IHC is generally expected to hold assets like shares, bonds, or property over a long period. These are considered long-term investments, not short-term trading positions.

It earns income from non-trade sources, such as:

  • Dividends from shares

  • Interest from loans or fixed deposits

  • Rental income from investment properties

Note: If your intention is to actively buy and sell assets for profit (e.g. trading shares or flipping properties), your company would be classified differently — as an investment dealing company, not an IHC.

2. Deductible Expenses for IHCs

Investment holding companies are eligible to claim tax deductions on certain types of expenses — but only if they are directly related to generating investment income.

Examples include:

  • Direct investment expenses
    e.g. Interest paid on loans used to finance investments

  • Regulatory & compliance costs
    e.g. Audit fees, accounting services, company secretary charges, tax filing fees, and bank charges

  • Operating expenses are directly tied to managing the IHC
    e.g. Office rent, staff salaries, directors’ fees, CPF contributions, and utilities

Note: This is not an exhaustive list. You can view the full set of deductible guidelines from the Inland Revenue Authority of Singapore (IRAS).

What Is a Financial Holding Company (FHC) in Singapore?

A Financial Holding Company (FHC) in Singapore is a type of holding company that controls at least one bank or licensed insurance company as its subsidiary. To establish an FHC, you must obtain written approval from the Monetary Authority of Singapore (MAS).

Types of Financial Holding Companies

There are two main types of FHCs in Singapore:

  • Ultimate FHC: The top-tier holding entity at the head of a financial group.

  • Intermediate FHC: A holding company that manages a subgroup within a larger financial structure.

Key Regulatory Requirements (Under the Financial Holding Companies Act)

To register as a Financial Holding Company in Singapore, your company must meet specific criteria. It may be structured as a limited liability company, limited liability partnership, or cooperative, and must satisfy at least one of the following:

  • Own 50% or more of the capital or assets in its financial subsidiaries

  • Hold 50% or more of the liabilities, or be entitled to at least 50% of the revenue generated by its financial subsidiaries

Additionally, FHCs are subject to strict oversight and must appoint an independent auditor to monitor and report on their business activities.

Common Activities of a Financial Holding Company

Financial Holding Companies are generally permitted to:

  • Acquire shares in financial institutions, subject to MAS regulations

  • Provide strategic or operational support to companies within the group

  • Participate in the management of subsidiaries

  • Offer financial, advisory, and back-office services such as accounting and processing

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.

Benefits of Setting Up a Holding Company in Singapore

Setting up a Singapore holding company offers several strategic and financial advantages, making it a popular structure for both corporations and high-net-worth individuals. Key benefits include:

  • ✅ Reduced risk exposure and access to better financing terms

  • ✅ Strong asset protection through ring-fencing

  • ✅ Efficient intergenerational wealth transfer

  • ✅ No capital gains tax

  • ✅ Tax-exempt dividends and avoidance of double taxation

Let’s break these down:

1. Risk Reduction & Access to Better Financing

A holding company structure helps isolate liabilities. If a subsidiary faces legal action or financial loss, the holding company’s assets remain protected, shielding the group from a total collapse.

Because of this reduced risk, banks and lenders are more likely to offer favorable financing terms to holding companies. These entities can also extend financial support to subsidiaries, often by issuing downstream guarantees that improve access to funding.

2. Asset Protection & Transaction Flexibility

Holding companies allow you to ring-fence valuable assets — such as intellectual property, real estate, or machinery — away from trading entities. If a subsidiary is sued or goes bankrupt, those key assets are shielded.

This structure also makes it easier to buy, sell, or transfer assets, particularly when managed through separate subsidiaries. For example:

  • You can trade a patent portfolio without triggering a full business restructuring.

  • Subsidiaries maintain separate accounting, which simplifies due diligence and asset valuation for buyers.

3. Tax Efficiency

Singapore’s tax regime provides several incentives for holding companies:

  • No capital gains tax on the sale of assets or shares

  • Dividend income is typically tax-exempt, especially when sourced from qualifying foreign subsidiaries

  • Avoidance of double taxation through Singapore’s extensive network of double tax treaties

4. Intergenerational Wealth Transfer

A holding company makes it easier to pass on wealth or control of family assets to the next generation. Shares can be transferred without disrupting the underlying operations of the business, creating a more stable and structured succession plan.

Intergenerational Wealth Transfer Through a Holding Company

A holding company is a powerful tool for succession planning, allowing assets to be passed down in a structured, tax-efficient, and centralized manner. By consolidating control over subsidiaries and investments, it enables intergenerational asset transfers with minimal disruption.

Key advantages include:

  • Tax deferral on asset transfers, helping reduce the immediate tax burden during succession

  • The ability to transfer an entire estate or group of subsidiaries as a single unit, even across jurisdictions

  • Consistent governance structures for family-owned wealth, ensuring long-term clarity and control

  • Delegated risk management and asset protection, allowing professionals to oversee wealth preservation under one umbrella

  • Flexibility to integrate other succession tools — such as foundations, family offices, wills, or a Lasting Power of Attorney (LPA) — into a unified strategy

This makes the holding company structure especially attractive for high-net-worth families seeking to preserve, protect, and pass on wealth across generations with minimal complexity and maximum control.

Avoiding Double Taxation with a Singapore Holding Company

Singapore has established Avoidance of Double Taxation Agreements (DTAs) with over 70 countries. These treaties help prevent companies from being taxed twice on the same income — once in the source country and again in Singapore.

However, to benefit from Singapore’s DTA network, your holding company must qualify as a Singapore tax resident.

What Determines Tax Residency in Singapore?

Singapore applies the "control and management" test to determine tax residency. In simple terms, a company is considered a Singapore tax resident if its key strategic and business decisions are made in Singapore — typically by the board of directors or senior executives.

If the company is foreign-owned and managed from overseas, it will likely be classified as a non-resident and will not be eligible for DTA benefits unless it meets residency requirements.

To claim these tax benefits, the holding company must:

  • Apply for and obtain a Certificate of Residence (COR) from the Inland Revenue Authority of Singapore (IRAS)

  • Submit the COR to foreign tax authorities when needed

How Does IRAS Assess Tax Residency?

When reviewing a COR application, the IRAS considers several key factors:

  1. 📍 Where control and management are exercised — i.e. board meetings and strategic decisions

  2. 🧾 Whether there is a valid commercial reason for setting up the holding company in Singapore

  3. 🗂 Whether the company receives admin support from local Singapore-based service providers

  4. 🤝 Whether the company has related entities with active business operations in Singapore

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

Tip: If you intend to claim DTA benefits, make sure your company’s control structure and decision-making processes are clearly based in Singapore.

No Capital Gains Tax in Singapore — With Important Exceptions

One of the key advantages of setting up a holding company in Singapore is that capital gains are generally not subject to tax. This means that when a parent company sells shares or assets, the profits from that sale are not taxed at either the subsidiary or holding company level.

However, there are some important exceptions to note:

  • If the gains are made from frequent or short-term trading of assets, they may be reclassified as ordinary income and taxed accordingly.

  • If capital gains are the company’s primary source of income, the Inland Revenue Authority of Singapore (IRAS) may also treat them as taxable.

Note: As of 1 January 2024, a new rule applies:

Gains from the sale or disposal of foreign assets received in Singapore by a relevant entity will be treated as foreign-sourced income.

This means that if your Singapore holding company sells overseas assets and brings the proceeds into Singapore, those gains may be taxable unless specific exemptions apply under Singapore’s foreign-sourced income rules.

To ensure compliance and minimize tax exposure, it’s important to assess whether your asset sales qualify as capital gains or taxable income under IRAS guidelines.

Tax-Exempt Dividends for Singapore Holding Companies

One of the most attractive tax benefits of using a Singapore holding company is the potential exemption of foreign-sourced dividends from corporate tax — provided certain conditions are met.

To qualify for this dividend tax exemption, two key requirements must be fulfilled:

  1. The “Foreign Headline Tax Rate” Condition
    – The subsidiary must be incorporated in a jurisdiction with a headline corporate tax rate of at least 15%, even if no actual tax is paid due to local incentives.

  2. The “Subject to Tax” Condition
    – The income from which the dividend is paid must have been subject to tax in the subsidiary’s jurisdiction, whether fully or partially.

Important Notes on Low-Tax Jurisdictions

If dividends are paid from subsidiaries located in tax-neutral or low-tax countries, the exemption may not apply. In such cases, the dividend income may be taxed in Singapore upon receipt.

That said, Singapore currently has no Controlled Foreign Corporation (CFC) rules. This means:

  • Undistributed foreign income (i.e. profits retained within the subsidiary) is generally not taxed in Singapore.

  • Tax is only considered when dividends are distributed and received in Singapore.

When structured correctly, these provisions can significantly reduce — or in some cases, eliminate — the tax burden on profits repatriated from overseas subsidiaries.

Other Tax Incentives for Singapore Holding Companies

In addition to dividend exemptions and capital gains benefits, Singapore offers a suite of attractive tax incentives for holding companies — particularly those that support regional expansion, innovation, or intellectual property (IP) development.

1. Headquarter Incentive

Singapore’s Headquarter Incentive is designed to attract multinational corporations to set up their regional or global headquarters in the country.

Eligible holding companies that oversee and coordinate key business functions across borders can apply for concessionary tax rates under this scheme, subject to approval.

2. Development and Expansion Incentive (DEI)

Under the DEI program, qualifying holding companies engaged in substantial business expansion may benefit from a reduced corporate tax rate — as low as 5% — on qualifying expansion income during a designated relief period.

Expansion income typically refers to incremental profits that exceed a company’s established base, calculated using the average annual income over a three-year post-incentive period.

IP Development Incentive (IDI)

Singapore offers strong support for companies managing intellectual property:

  • The IP Development Incentive (IDI) provides a 5% to 10% concessionary tax rate on qualifying IP-related income (e.g. royalties, licensing revenue).

  • This incentive is valid for income earned up until 2028, subject to eligibility and approval by the authorities.

In addition, holding companies can claim enhanced tax deductions for:

  • R&D activities

  • Licensing and technology acquisition

  • IP registration and related legal fees

Additional Tax Advantages for Holding Companies in Singapore

Beyond exemptions on dividends and capital gains, Singapore’s tax framework offers several other advantages that make it an ideal location for setting up a holding company. These include a low corporate tax rate, no dividend withholding taxes, and the absence of complex anti-avoidance rules found in many other jurisdictions.

Here’s a closer look:

Low Corporate Income Tax

Holding companies incorporated as private limited companies are subject to a flat corporate income tax rate of 17% — one of the most competitive rates in the region.

No Withholding Tax on Dividends

Singapore does not impose withholding tax on dividends, even when they are paid to non-resident shareholders. This allows for efficient repatriation of profits to foreign owners or parent entities.

No Controlled Foreign Corporation (CFC) Rules

Unlike many other jurisdictions, Singapore does not enforce Controlled Foreign Corporation (CFC) rules. This means:

  • Profits retained in foreign subsidiaries are generally not taxed in Singapore, unless they are distributed and received as taxable income.

This offers greater flexibility in cross-border tax planning, especially for holding companies managing multiple international entities.

No Thin Capitalization Rules

Singapore does not apply thin capitalization rules, which typically limit how much debt a company can use to reduce taxable income.
However, transfer pricing rules do apply — meaning all transactions between related entities (e.g. between a holding company and its subsidiaries) must be priced at arm’s length.

To ensure compliance, it's strongly recommended to consult a qualified tax advisor when structuring intercompany transactions.

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.

Business in SingaporeRaymond ChanIncorporation