Set Up a Holding Company in Singapore for Investment Success 2024

As we approach 2024, Singapore’s image as a leading destination for holding corporations, particularly for international entrepreneurs and investors, remains strong. The country’s excellent location, conducive business environment, beneficial tax structure, and robust legal framework all make it tempting to establish a holding company there. Whether you’re an international entrepreneur looking to diversify your portfolio or a foreign business aiming to streamline your global operations, this updated guide will walk you through everything you need to know about setting up a holding company in Singapore in 2024.

Holding Company Overview

A firm that was established only to hold equity in other companies is known as a holding company. It doesn’t conduct day-to-day operations but manages and controls subsidiaries, allowing investors to minimize risk, diversify their investments, and streamline management.

Benefits of Setting Up a Holding Company in Singapore

In 2024, Singapore remains a top choice for establishing holding companies for various reasons:

Favorable Corporate Tax Rates

Singapore’s corporation tax rate is regulated at 17%, one of the lowest in the world, with no capital gains tax. This is highly advantageous for holding companies focused on reinvesting profits.

Attractive Tax Incentives

Singapore provides foreign holding companies with a number of tax incentive packages that can drastically lower their tax obligations. These programs include the Start-Up Tax Exemption Scheme and the Global Trader Programme (GTP).

Robust Legal and Regulatory Environment

The Inland Revenue Authority of Singapore (IRAS) and the Accounting and Corporate Regulatory Authority (ACRA) provide efficient registration procedures and offer a solid legal foundation.

Strategic Location

Because of Singapore’s status as a worldwide economic hub, holding corporations have better access to key markets throughout Asia and beyond, facilitating the management of subsidiaries across borders.

Ease of Doing Business

It is commonly known that one of the best places to do business is in Singapore. By 2024, developments in digital services will have made activities like company registration and banking even easier.

2024 Updates: Key Trends in Singapore’s Holding Company Landscape

Digital Transformation for Holding Companies

As Singapore embraces technology, the process of managing holding companies has evolved. Many firms now adopt digital solutions for governance, risk management, and accounting. Foreign investors can take advantage of these tools to manage their operations more efficiently and remotely.

ESG Compliance

Environmental, Social, and Governance (ESG) factors are increasingly important in 2024. Singapore’s business landscape values sustainability, and holding companies that prioritise ESG compliance would benefit, particularly with new incentives and regulations encouraging green investments.

Post-COVID Business Climate

The global business landscape has shifted post-pandemic, and Singapore has adapted its policies to foster a more resilient business environment. Foreign investors can expect fewer bureaucratic hurdles and new incentives designed to encourage economic recovery.

Steps to Set Up a Holding Company in Singapore

The process of establishing a holding company in Singapore is straightforward, even for foreign entities. Here are the steps:

Step 1: Choose a Business Structure

Foreigners looking to set up a holding company must first decide on a business structure. A private limited corporation is the most popular option since it reduces stockholders’ obligations and provides more flexibility.

Step 2: Register Your Company with ACRA

The Accounting and Corporate Regulatory Authority (ACRA) oversees company registration. Here’s what you’ll need:

• Company Name: Ensure it is unique and approved by ACRA.
• Company Constitution: This outlines the rules governing the company’s operations.
• Directors and Shareholders: At least one director must be a resident of Singapore. Foreigners can appoint a local director or use a nominee service.
• Registered Office Address: You must provide a local office address in Singapore.
• Company Secretary: A Singapore-based company secretary must be appointed within six months of incorporation.

Once these details are ready, registration can be done through ACRA’s BizFile+ portal. Most people complete their registrations in a single day.

Step 3: Submit Documents to ACRA

You will need to prepare the following documents:

• Company Constitution
• Identification and Residential Address of Shareholders and Directors
• Proof of Registered Office in Singapore
• Additional Documents (if foreign entities are involved) to prove legitimacy.

Step 4: Open a Corporate Bank Account

Foreigners should open a corporate bank account in Singapore to separate business and personal finances. Most banks will require:

• Company registration certificate
• Company constitution
• Identification of shareholders and directors

By 2024, a large number of international businesses will favour digital banking services provided by leading banks and fintech companies, which provide convenient account access and management from any location.

Tax Benefits for Foreign-Owned Holding Companies

Singapore’s tax system remains highly advantageous for holding companies in 2024. Here’s why:

Corporate Tax Rate

The corporate tax rate remains low at 17%.

No Capital Gains Tax

Foreign investors can sell assets or shares without incurring capital gains tax, making it easier to reinvest profits.

Tax Exemptions and Incentives

Start-Up Tax Exemption (SUTE)

New companies can enjoy up to 75% tax exemption on their first S$100,000 of chargeable income for the first three years.

Global Trader Programme (GTP)

One major benefit for foreign enterprises wishing to handle worldwide company operations from Singapore is the tax benefits this program gives for trade activities.

Double Taxation Agreements

Singapore has signed over 90 double taxation treaties with various countries. This reduces withholding taxes on dividends, interest, and royalties, allowing foreign holding companies to benefit from optimized tax planning.

Opening Subsidiary Companies Under a Holding Company

Foreign investors can set up subsidiary companies under their holding company. This allows the parent holding company to own a majority of the shares and maintain control over the subsidiary’s operations. Subsidiaries provide greater flexibility and lower risk when entering new markets and sectors of the economy.

Common Challenges and How to Overcome Them

Compliance with Local Regulations

When planning to form a holding company, one of the most difficult things for international corporations to do is navigate Singapore’s regulatory structure.

To maintain corporate governance and transparency, Singapore’s regulatory agencies, including the Inland Revenue Authority of Singapore (IRAS) and the Accounting and Corporate Regulatory Authority (ACRA), have strict guidelines in place.

For instance, businesses must comply with Singapore’s Companies Act, file yearly returns, and have accurate accounting records.

The company may be subject to fines, penalties, or even have its ACRA registration revoked if certain regulations are broken.

As a result, a lot of foreign investors choose to deal with specialised legal firms having offices in Singapore or local corporate service providers. From business creation, regulatory compliance, and tax filings to ongoing legal requirements like keeping shareholder records and hosting annual general meetings (AGMs), these companies offer comprehensive services that cover it all.

By working with professionals familiar with local laws, foreign investors can ensure full compliance and avoid regulatory pitfalls.

Corporate service providers may easily manage these requirements as well, making sure that your holding company keeps up with ACRA regulations. Singapore requires corporate secretarial services, for instance.

Resident Director Requirement

One of the largest challenges faced by international investors creating a holding company in Singapore is the requirement to designate a local director. ACRA mandates that all Singaporean organisations, including holding companies, have a minimum of one director who resides in Singapore. This can be a Singapore citizen, a permanent resident, or a foreigner holding a valid EntrePass or Employment Pass (EP).

For many foreign investors who do not have a local partner or representative, fulfilling this requirement can be difficult. However, employing a nominated director service is a popular option. These services provide qualified local individuals to act as your resident director, ensuring compliance with ACRA’s rules.

Selecting a reliable nominee services provider is essential if you wish to reduce the risks associated with poor governance or a lack of accountability.

If foreign investors want to actively administer the holding company, they can fulfil the resident director requirement by applying for their own Employment Pass. The Employment Pass application process involves meeting certain minimum salary and qualifications criteria, as stipulated by Singapore’s Ministry of Manpower.

Visa Regulations

If you intend to relocate key workers or manage your holding company activities from Singapore, you must understand the country’s visa and work permit laws. Foreigners who want to work in Singapore must first apply for a work visa, the most frequent of which is the Employment Pass (EP).

Foreign professionals, managers, and executives who meet the Ministry of Manpower’s (MOM) requirements, which include a minimum wage and qualifications from authorised universities, are awarded an Employment Pass. The minimum salary required for an Employment Pass as of 2024 varies based on the applicant’s age and experience and has been modified to meet Singapore’s changing economic circumstances.

Companies must also state that, in compliance with the Fair Consideration Framework, they considered local talent before employing overseas labour.

An other choice for business owners is the EntrePass. Owners of multinational companies who want to move to Singapore to manage their operations are the target audience. However, the qualifications for this visa are more strict requiring the company to be innovative and add value to Singapore’s economy.

Companies seeking to relocate several employees might investigate various work pass systems such as the S Pass or Personalised Employment Pass (PEP), based on the employees’ roles and salary bracket.

It is essential to prepare ahead because there are differences in the processing dates for different kinds of visas and the possibility of delays or denials if standards are not met.

You can work with a corporate service provider that specialises in visa applications or hire an immigration consultant in your area if you want the process to move forward more swiftly. These professionals could assist with preparing documentation, ensuring that all requirements are satisfied, and liaising with the Ministry of Manpower (MOM) to secure the necessary work permits.

Conclusion

Setting up a holding company in Singapore in 2024 offers tremendous opportunities for foreign investors. Singapore’s favourable tax regime, strong legal framework, and advanced digital infrastructure make it perfect for maintaining and expanding a diverse portfolio. Foreign business owners can effectively create a holding company and exploit their assets in this growing global location by adhering to the processes and making use of the benefits provided.