Taxation of Holding Companies in Singapore

By Vlad Cuc, specialist in company formation matters in Singapore 

Holding companies are legal entities created with the purposes of gathering and administering the assets of other companies. This type of structure is very popular in Singapore because the shareholders of a holding company have various benefits.

The taxation of a holding company is also very advantageous in Singapore. Below, our company formation consultants in Singapore explain how holding companies are taxed in the city-state.

The corporate tax applied to Singapore holding companies

A holding company registered in Singapore will be treated as any other local company, therefore it will be subject to the corporate tax. The Inland Revenue Authority in Singapore (IRAS) is the main governmental body assessing the income of holding companies and levying the corporate tax.

The taxation of a holding company in Singapore is based on the following criteria:

• - the IRAS computes the income tax based on the worldwide profits of the holding company;
• - the corporate tax rate applicable in Singapore is 17%, one of the lowest in the region;
• - the IRAS computes the corporate tax by assessing the incomes and expenses of the company;
• - the corporate tax is based on a year of assessment (YA) and it is levied on the current year for last year.

We also offer accounting services in Singapore in order help foreign investors understands how the taxation of holding companies occurs.

Tax advantages of holding companies - presented by our experts in company formation in Singapore

Singapore is an attractive jurisdiction for setting up holding companies because of the advantages it offers from a taxation point of view. Compared to other states, Singapore offers the following tax benefits to holding companies:

1. the dividends paid to local and foreign shareholders in a holding company are exempt from taxation here;
2. certain expenses are exempt from the corporate tax in Singapore, especially in the case of investment holding companies;
3. Singapore has many double tax treaties which provide for other tax exemptions, reductions or deductions;
4. Singapore holding companies benefit from a simplified procedure related to the tax assessment.

The city-state is considered one of the best countries in the world for doing business in, so if you want to open a holding company here, please contact our Singapore company formation agents.