Reasons To Register A Holding Company In Singapore
A holding company is a firm that owns shares in other businesses, as it doesn’t provide products or services of any nature, which indirectly makes it simple to register a holding company in Singapore virtually anywhere.
But, there are certain considerations to take into account before selecting a location for your holding firm.
The ideal location will bring numerous benefits to your business and enable it to expand rapidly and Singapore is an ideal location.
The aim of the holding company isn’t to manufacture items or services but to hold shares, manage its subsidiary, and lower the risk for its owners. This article explains the main reasons to register a holding company in Singapore. So, without any confusion let’s begin.
Various reasons to register a holding company in Singapore
Here is a list of numerous reasons to register a holding company in Singapore. Let’s see what are they & how they help firms in running a successful business in Singapore.
Many business structures available
One of the reasons to register a holding company in Singapore is that there are many business structures to choose from when you consider establishing a holding company. A holding company may be formed in various forms, as the most commonly employed structure is a limited liability corporation.
Other structures for companies could include a limited partnership, trust, or a foundation. To determine which one is best for your company seeks out a seasoned corporate services company.
Operate at anyplace around the globe
When you register a holding company in Singapore, your subsidiaries and assets can be located in Singapore or any other part of the world. There are no limitations regarding the transfer of assets.
Holding company structures, therefore, can operate anyplace around the globe which is one of the reasons to register a holding company in Singapore.
The loss of insulation
Your holding company can draw together the funds of affiliates. In this way, when one of the subsidiaries performs excellently, its parent benefits. However, when the subsidiary fails to perform, the parent company is not penalized more than the loss of the original investment.
If, for instance, the subsidiary company files for bankruptcy it is legally ineligible to sue the parent company. This is an important reasons to register a holding company in Singapore. Hire a company services provider to help in dividing assets between different subsidiaries, so that your liabilities are clearly defined.
Attractive tax system
The establishment of a holding corporation in Singapore could provide attractive tax advantages. It is possible to qualify to receive tax benefits such as Pioneer Status or Development and Expansion Incentives.
A qualified tax professional can reduce your tax bill using the appropriate corporate structure, which includes using double-tax agreements to reduce the amount of corporate and personal taxes, and ensuring that you have a strong commercial argument for the overall structure.
Simple compliance procedures
The procedures to register a holding company in Singapore are made simple, as, in addition to tax filing requirements, the holding companies are usually required to file their consolidated financial statements for the business and its subsidiaries, along with an annual balance sheet at the close of each financial year.
The financial statements you submit must be in line with the established Accounting Standards to give an accurate and honest overview of your company’s financial condition. This is one of the reasons to register a holding company in Singapore.
Guard your assets
Another one of the reasons to register a holding company in Singapore is that it guards your assets. If you divide your assets among several subsidiaries, it becomes simpler to transfer control of the assets or even sell them. This is because of the division of accounts.
It is possible to sell the subsidiary as a complete entity without having to go through the trouble of restructuring your company or undertaking difficult audits. Particularly for high-net-worth individuals, established companies can help protect your assets and protect your assets from liability or lawsuits.
Planning for succession
Holding companies are usually created for the sole goal of transferring estates to the next generation. Transfers between generations can help to delay taxation and allow the entire estate to be transferred in a single unit. The most commonly used structure for this purpose is trust.
In addition to clear governance guidelines, you can also engage a corporate service provider that specializes in the management of risk, asset protection, and preservation of wealth.
Reduce failure probabilities
Another one of the essential reasons to register a holding company in Singapore is that it will decrease the risk of a systemic loss of a whole business. Through the establishment of separate subsidiaries rather than one company, you reduce the chance of failing.
Holding companies may also offer downstream guarantees to allow their affiliates to get more favorable financial conditions. For example, you could create subsidiary companies for capital-intensive projects that are not operating subsidiaries.
If a company with significant debt issues fails, its financial cash flow issues do not impact other subsidiary companies. Banks usually consider this and thus achieve a lower capital cost.
Holding companies and their subsidiaries are typically run by a board of directors. Therefore, by establishing such structures, you can assure centralized coordination and oversight as well as give each of the arms the ability to function independently.
It also gives you control over the ownership of the company as well as management policies. In certain instances, investors might prefer each intellectual asset to be managed by a single entity to ensure they are better managed.
In separating the shareholders from the daily activities of a subsidiary, owners can remain anonymous regarding their involvement. Foreign investors are advised to make use of the services of professionals in the field to register a holding company in Singapore
For the most common company structures you choose, at least 1 resident and shareholder is mandatory. There is typically no limit to the number of directors who are foreign for holding companies.
As we have seen the numerous reasons to register a holding company in Singapore the next steps are straightforward, i.e. to register a holding company in Singapore. However, it is always advisable to consider assistance from professional experts to reduce the chance of errors.
Odint Consultancy, experts will manage all your registration requirements for companies while you focus your full attention on your business. Get in touch to know more about it.
Singapore corporations that hold shares have access to a range of tax benefits. For instance, shareholder dividends are tax-free and capital gains are tax-free. Capital gains also have zero tax rates.
Singapore is a popular location to establish a holding company for many foreign corporations because of its strategic geographical position, economic connectivity with world-class infrastructure, robust legal framework, efficient tax system, skilled workforce, and stability with its neighboring regions.
The major tax benefit of the holding company can be realized because it does not need to file a tax return for each subsidiary. Typically, subsidiaries can give dividends back to the parent company, without creating a tax burden.
The goal of holding companies the purpose of holding company to give owners of multiple companies the to reduce liability, simplify the management process, and keep control over each company.
Azhar Ansari is a company formation specialist with 8+ years of expertise in international business. Financial planning, risk management, and other related areas.